The U.S. agriculture industry is pressuring the Department of Transportation for immediate intervention in foreign-owned carriers’ denial of U.S. ag exports in favor of sending back empty containers to be filled with Chinese exports.
In a letter sent to Secretary Pete Buttigieg on Monday that was shared with American Shipper, almost 300 agriculture and forest product companies demanded the secretary intervene to protect U.S. exporters.
“We are hopeful the secretary will act upon this urgent request soon, as the situation is becoming increasingly dire,” said Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC). “We have specific measures we can propose and look forward to the opportunity to present them.”
This letter is the latest in a series the agriculture industry has sent in an urgent plea to stop the denial of trade and increased demurrage costs. President Biden and the Federal Maritime Commission have received similar letters.
Part of the letter to Buttigieg reads: “Whereas shipping containers filled with imported goods are normally unloaded, sent to rural areas, filled with agricultural commodities and then shipped abroad, the lucrative freight rates paid by the import cargo, combined with congestion and delay at ports on our West and East coasts are leading VOCCs to immediately return empty containers to their overseas ports of origin. The situation is exacerbated by carriers’ failure to provide accurate notice to our exporters of arrival/departure and cargo loading times and then imposing draconian financial penalties on the exporters for ‘missing’ those loading windows – a practice that the FMC has found to be unreasonable.”
The letter continues, “Foreign markets are critical to American farmers and ranchers, with more than 20% of agricultural production going abroad. It is cost prohibitive for producers to rework the supply chain and find alternative means of fulfilling their overseas contracts.”
Buttigieg is aware of the importance of the issue, having touched on it last month during testimony before Congress.
In his first interview as chairman of the FMC, Daniel Maffei spoke extensively with American Shipper about the unprecedented import boom and the inability of U.S. exporters to have “full access to ships.”
“We have seen hundreds and thousands of export containers that have been rejected for the last several months. This is not ideal. … We want to promote exports,” explained Maffei. “So the question is if there is wrongdoing, we want to get to the bottom of it. As a commission, we want to enforce our rules. If there is improper willingness to negotiate or if there is unreasonable conduct by the carriers, we want to get to the bottom of it. That’s what our investigative process is.”
The FMC currently is investigating whether the carriers’ actions are in violation of the 1984 Shipping Act, which requires the nondiscriminatory regulatory process by carriers for the movement of goods by water. More than 20% of U.S. agriculture produced is exported.
The mini U.S. economic boom pushed the goods trade deficit to break another new record in March. Imports rose more than exports after both slumped in February, leading the goods trade deficit to rise to a new high of $90.6 billion in March.
According to analysis quoted in the letter, the carriers’ denial of trade has resulted in approximately $1.5 billion in lost agriculture exports. This is in sharp contrast to China, where the full-year trade surplus reached $535 billion, the highest since 2015.
The letter explains: “These losses come on the heels of trade conflict and pandemic that have wiped away markets globally. The mounting frustration of U.S. agriculture explains why a vast array of food and agriculture associations supported the Federal Maritime Commission’s investigation Fact Finding No. 29, International Ocean Transportation Supply Chain Engagement, to address VOCCs’ predatory or unreasonable behavior and its rule setting forth guidelines for detention and demurrage.”
Friedmann said, “We do not need more investigations. We need action — now. Every extra empty container onboard a vessel instead of a fully loaded container filled with U.S. exports impact the nation’s GDP. Agriculture is a key industry for our economy.”