• ITVI.USA
    14,843.010
    -211.590
    -1.4%
  • OTLT.USA
    2.921
    0.002
    0.1%
  • OTRI.USA
    19.130
    -0.090
    -0.5%
  • OTVI.USA
    14,806.860
    -212.610
    -1.4%
  • TSTOPVRPM.DALLAX
    1.460
    0.170
    13.2%
  • TSTOPVRPM.PHLCHI
    2.270
    0.030
    1.3%
  • TSTOPVRPM.CHIATL
    3.790
    0.080
    2.2%
  • TSTOPVRPM.LAXDAL
    3.740
    0.020
    0.5%
  • TSTOPVRPM.LAXSEA
    4.150
    -0.010
    -0.2%
  • TSTOPVRPM.ATLPHL
    2.910
    -0.050
    -1.7%
  • WAIT.USA
    131.000
    -2.000
    -1.5%
  • ITVI.USA
    14,843.010
    -211.590
    -1.4%
  • OTLT.USA
    2.921
    0.002
    0.1%
  • OTRI.USA
    19.130
    -0.090
    -0.5%
  • OTVI.USA
    14,806.860
    -212.610
    -1.4%
  • TSTOPVRPM.DALLAX
    1.460
    0.170
    13.2%
  • TSTOPVRPM.PHLCHI
    2.270
    0.030
    1.3%
  • TSTOPVRPM.CHIATL
    3.790
    0.080
    2.2%
  • TSTOPVRPM.LAXDAL
    3.740
    0.020
    0.5%
  • TSTOPVRPM.LAXSEA
    4.150
    -0.010
    -0.2%
  • TSTOPVRPM.ATLPHL
    2.910
    -0.050
    -1.7%
  • WAIT.USA
    131.000
    -2.000
    -1.5%
American ShipperMaritimeNewsRegulatory Agencies

Container lines question claims of unreasonable rates, poor service

World Shipping Council contends lack of evidence that carriers are not meeting obligations to U.S. exporters

The World Shipping Council (WSC) has pushed back against allegations by two Federal Maritime Commissioners (FMC) that the container lines are not meeting service obligations — particularly to U.S. agriculture exporters — citing a lack of evidence.

In a Monday letter to FMC Commissioners Carl Bentzel and Daniel Maffei, WSC President and CEO John Butler pointed out that the customer bases of his members — which account for 90% of global liner vessel capacity — are too varied for the association to speak to specific operational and commercial procedures between carrier and customer.

“Moreover, your letter makes reference to reports of difficulties faced by all supply chain participants, with particular emphasis on exporters, but there are no specific facts stated,” Butler asserted. “Because of that, and because the analysis under the Shipping Act sections that you cite is in each case dependent on the facts of any given situation, we have no basis to address the legal points that you raise.”

The letter to which Butler refers was sent to WSC on Dec. 16. In it, Bentzel and Maffei recounted growing allegations that ocean carriers are abandoning U.S. exporters by not providing empty containers for shipments to Asia and/or are charging unreasonable rates for empty containers — potential violations of the Shipping Act.

Bentzel and Maffei also asserted in their letter that because of the current surge in containerized imports at U.S. ports, it is “imperative” that there be balance between carriers’ import and export services.

Butler explained, however, that U.S. imports and exports have not been balanced for a long time. He noted that 2019 U.S. container volume came in at 24.9 million twenty-foot equivalent units (TEUs) of imports compared to 13 million TEUs of exports. “This means that, if the supply chain is to continue to function, almost half of the loaded containers imported must be returned empty to the countries from which U.S. imports originate.”

In addition, he said, the geographic regions of import and export flows often are not the same: imports tend to flow to areas of high population density, such as on the coasts, while exports, particularly agricultural exports, tend to flow out of low population areas. “This means that empty containers, if indeed they are available, must often be moved considerable distances at significant expense and additional time in order to be available for certain export cargoes.”

Butler listed steps that his members are taking to improve cargo flows, including:

  • Employing all available vessel tonnage.
  • Repositioning vessels to trades with the highest demand.
  • Speeding repositioning of excess empty containers and increasing cargo fluidity. 
  • Purchasing, leasing, repairing and deploying all available containers. 
  • Working with customers and inland transportation providers to encourage prompt return of empty equipment for repositioning for carriage of import and export cargoes.

The FMC has been putting pressure on ocean carriers to resolve allegations of unreasonable practices and charges that have been under investigation by the FMC for much of the year. The agency announced in November that it was expanding a fact-finding mission into demurrage and detention charges to investigate ocean carriers operating in alliances calling at the ports of Long Beach, Los Angeles, or New York and New Jersey.

“If parties bring credible factual allegations to the Commission, supported by evidence, I am confident that the Commission will fairly adjudicate any such complaints in the same way that it always has,” Butler stated. “In doing so, I am equally confident that the Commission will recognize the unusual and challenging situation in which all supply chain participants find themselves as a result of the current cargo surge.”

Related articles:

Click for more FreightWaves articles by John Gallagher.

John Gallagher, Washington Correspondent

Based in Washington, D.C., John specializes in regulation and legislation affecting all sectors of freight transportation. He has covered rail, trucking and maritime issues since 1993 for a variety of publications based in the U.S. and the U.K. John began business reporting in 1993 at Broadcasting & Cable Magazine. He graduated from Florida State University majoring in English and business.

4 Comments

  1. These are the same shippers who did not volunteer to pay rates high enough to cover the shipping lines costs forcing a number of companies to go bankrupt. The same shippers who day there is a truck driver shortage and do not provide overnight parking.

  2. Plain and simple, the equipment availability issue is a function of the trade imbalance and demand for empties in Asia, the cost and utilization impacts of inland repositioning, and the costs and service requirements associated with moving perishables, against the rates shippers representing roughly 20% of the market have historically been willing to pay.

    The US abandoned subsidies for a US-flag maritime sector to ensure carriage of exports in the early 1980s. The principle of common carriage was largely dropped with passage of OSRA in 1998. The free markets ag exporters demanded for years to beat down rates historically work against them on service. Market players need to sit down and negotiate cost-sharing and pools for inland repositioning, or government needs to resume subsidy with regulation. The rest is noise and posturing.

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