Dive Brief:
- The Federal Maritime Commission is expanding the scope of its fact finding mission related to system challenges stemming from the coronavirus pandemic to include ocean carrier detention and demurrage, container return and container availability for U.S. export, the agency announced Friday.
- The move comes after discussions the agency had with stakeholders who expressed concerns about the movement of containers through port facilities and practices that were leading to "unprecedented negative impact on congestion and amplifying bottlenecks at these ports and other points in the Nation’s supply chain," according to the order.
- The order will focus on alliances that call the Port of New York and New Jersey, the Port of Long Beach, and the Port of Los Angeles. FMC Commissioner Rebecca F. Dye said in a statement that she would "have all enforcement options at my disposal to address the crisis that exists in our major port gateways."
Dive Insight:
Swelling import volumes have contributed to the congestion and bottlenecks Dye pointed to in the order. Southern California warehouses are nearing their capacity, and some businesses are using the containers as low-cost storage.
The uptick has made it harder to get equipment as Asian exporters see surging demand and has resulted in a rise in dwell time for shippers.
The flow of empty containers has become a concern for U.S. exporters who have witnessed containers leave on ocean carriers before having the chance to load them with cargo.
"We all need — for agriculture exports — empty containers to load our exports in," Agriculture Transportation Coalition Executive Director Peter Friedmann said in a Port of Los Angeles press conference last month. "And [the Port of Los Angeles has] those empty containers. The question is, can we get them going inland to Kansas and Nebraska to pick up that valuable export cargo or are those ocean carriers in a hurry to get them back empty to Asia to load them with golf clubs and tennis shoes and consumer electronics coming back."
The equipment shortage has led carriers to announce intermodal surcharges, including a $350 per container fee from MSC and CMA CGM, that applies to "the transpacific trade lane that move out of the port complex to U.S. inland point shipments," according to a report from Resilience360.
Logistics issues are likely to continue next month and into 2021, Sara Alkawari, a supply chain risk intelligence analyst at Resilience360, said in the report. "Supply chain managers depending on operations at the ports of Los Angeles and Long Beach should take note of the increased risk for disruption, activate contingency plans accordingly, and evaluate the benefits of re-routing shipment through other U.S. container gateways," she wrote.
Shippers are increasingly looking to avoid Long Beach and Los Angeles as a result of the disruptions, according to Resilience360.
In a Friday statement, the Agriculture Transportation Coalition called the FMC's investigation "terrific news" for its members.
Earlier this year, the FMC issued new guidance on detention and demurrage, but some are worried ocean carriers are not following it.
"Unfortunately, months later, we find ourselves facing significant congestion at our Nation’s largest seaports and allegations that parties in the industry are utilizing detention and demurrage as profit centers rather than the means to incentivize the rapid and constant return of equipment," FMC Commissioner Louis E. Sola said in a statement on Friday.
FMC Commissioner Daniel B. Maffei similarly noted that he worries "too many in the industry" may be "ignoring" the guidance issued earlier this year.
"It was not lost on the Commissioners that no carrier or terminal implemented any of the measures in the Guidelines, nor any others,"Agriculture Transportation Coalition said in its Friday release.
The final issue the FMC plans to focus on during this expanded investigation will be container returns, which is an area where many stakeholders have been asking for improvement through the use of more dual transactions. The Port of Los Angeles announced plans last week to propose monetary incentives for dual transactions to the Los Angeles Board of Harbor Commissioners.
Commissioner Dye acknowledged the need to improve dual moves earlier this year after discussions with "the port directors in Los Angeles and Long Beach, ocean carrier chief executive officers, Southern California marine terminal operators, longshore labor leaders, and FMC Innovation Teams," according to a June press release.
