Lawmakers Say Ocean Carriers are Undermining US Export Trade, Cry Foul on China

By Tom Ozimek

More than 100 members of Congress are calling on federal maritime authorities to probe what they say are ocean carrier actions that undermine American exports by refusing to pick up U.S. goods, instead returning empty after dropping off imports.

In a letter (pdf) to Michael A. Khouri, chair of the Federal Maritime Commission (FMC), the lawmakers voiced concern over reports that certain vessel-operating common carriers (VOCCs) are declining to ship U.S. agricultural commodity exports from ports in the United States.

Rep. Dusty Johnson (R-S.D.), the Republican lawmaker spearheading the bipartisan effort, is blaming China.

“Market access is only as good as the access to shipping infrastructure,” Johnson said in a statement. “Once again, China is participating in unfair trade practices, prioritizing empty shipping containers over U.S. agriculture products. America’s farmers work hard to produce a high-quality product, and we can’t allow China to shut them out of the market.”

At issue are reports that some ocean carriers are delivering shipments to U.S. ports and then leaving without refilling empty containers with American goods—chiefly agricultural—meant for export.

“Such activity constricts entire supply chains and propels trade to move only in an inbound direction,” the lawmakers wrote. “These conditions are unsustainable for exporters, put significant strain on the U.S. economy, and simply unacceptable.”

The lawmakers are calling on Khouri to continue probing what they called “alarming reports” and take action to resolve the matter.

The problem is not new, with reports last fall estimating that shipping carriers rejected American agricultural export containers worth hundreds of millions of dollars, instead sending empty containers back to China. The refusals came in October and November 2020, the peak season for agriculture exports.

“Compared to the same months in the previous time periods, there is a clear increase in the ratio of empty export containers to total exports,” John Martin, manager of the economic and transportation consulting firm Martin Associates, told CNBC in a recent interview. “This underscores our continued dependency on China.”

This aerial photo shows shipping containers stacked at a port in Lianyungang, in China’s eastern Jiangsu province, on Jan. 14, 2021. (STR/AFP via Getty Images)

Redwood Logistics CEO Mark Yeager told CNBC that about three out of four containers from the United States to Asia are “going back empty.”

“The reason for this is the Chinese are being so aggressive about trying to get empty containers back … that it’s hard to get a container for U.S. exporters,” he told the outlet.

Earlier reports of bottlenecks and fees at U.S. ports prompted the FMC to launch a probe—called Fact Finding No. 29—which was expanded in November via a supplemental order (pdf) to include reports of refusals to ship American exports.

“Based on information obtained in the fact finding, the commission is concerned that vessel-operating common carriers in alliances who call on the Port of New York and New Jersey or who call on the Port of Long Beach and the Port of Los Angeles may be employing practices and regulations that violate” portions of the U.S. code that pertain to shipping, according to Rachel E. Dickson, FMC secretary. Dickson noted reports of stakeholders describing problems with carriers returning with empty containers.

On Feb. 17, the FMC announced that commissioner Rebecca F. Dye would issue information demand orders to ocean carriers and marine terminal operators to determine if they’re meeting their legal obligations, including “information on their policies and practices related to container returns and container availability for exporters.”

Carriers and operators found to be in violation of 46 USC 41102(c), which the FMC says prohibits “unjust and unreasonable practices and regulations related to, or connected with, receiving, handling, storing, or delivering property,” may be subjected to enforcement actions. The findings may also be used as a basis for hearings or further rulemaking.

In their letter, the lawmakers are also calling on the FMC to provide regular updates to Congress on the matter.

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