Hearing Explores What Happens to Exporters in an Import Boom

The House Transportation and Infrastructure Subcommittee on Coast Guard and Maritime Transportation held a hearing this week on the “Impacts of Shipping Container Shortages, Delays, and Increased Demand on the North American Supply Chain.” The hearing was split into two panels: the first comprised of two officials from the Federal Maritime Commission and the second panel a group of exporters and shipping experts.

Witnesses included:

Dan Maffei, Chairman, Federal Maritime Commission

Rebecca Dye, Commissioner, Federal Maritime Commission


John Butler, President and CEO, World Shipping Council

Alexis Jacobson, U.S. Forage Export Council

Frank Ponce De León, Costal Committeeman, International Longshore & Warehouse Union

Eugene D. Seroka, Executive Director, Port of Los Angeles

Jen Sorenson, President, National Pork Producers Council

With American consumers buying record amounts of Asian-manufactured goods, shippers often cannot turn their boats around fast enough to accommodate imports. As a result, shipping companies are choosing to unload their cargo on the West Coast and return to Asian ports empty. In many cases, spending time to load containers of American exports is less economical than setting sail with an empty ship and returning to Asia early to load up on premium-priced cargo. But left behind in this shipping rush are American exporters, particularly in the agriculture and lumber sectors, who have trouble finding cargo space to export their goods to Asian markets.

In normal times, said subcommittee chairman Salud Carbajal (D-CA), the import to export ratio is 2:1 but the currently ratio is about 3:1. Seroka noted that in the Port of Los Angeles, approximately 30-35 percent of containers leave empty. However, in January, Seroka told Bloomberg that 75 percent of containers left empty. There has been fluctuation, but this surge is projected to last until mid-2022, with Commissioner Maffei warning that the situation could easily get worse before it gets better.

U.S. law under the Shipping Act is intended to help exporters penalize shipping companies if they engage in anti-competitive behavior, among other things. While Commissioners Maffei and Dye made clear their intent to help exporters and penalize carriers who were violating the Shipping Act, it is unclear how they can. FMC powers are based on deregulation, said Maffei, and while this has worked when shipping costs were low, the FMC has few tools now that rates are high – it cannot interfere with the markets or set rates. Some Representatives asked Maffei and Dye why the FMC was not punishing offenders if these practices violated the Shipping Act. Both sidestepped these questions.


Shipping costs have skyrocketed, with Maffei noting that the cost of a container has increased to four times what it was last year, in some instances even more. Representatives argued that lower cost goods such as grains, citrus, almonds, walnuts, tomatoes, lumber, seed, and hay have been left behind. The small margins in agriculture make the currently high shipping costs unaffordable.

However, according to Butler, data shows U.S. agriculture exports are up compared to pre-COVID levels. A USDA report predicted that U.S. agricultural exports will reach a record $164 billion in 2021. Butler claimed that less than 15 percent of all American agriculture is exported by container ships, saying that most seaborne agriculture exports move in bulk ships, thereby implying that the difficulties in procuring containers are not widespread.

But American exporters have increasingly began using containers even for cargo that could be moved in bulk. This model has helped smaller American producers have the flexibility to ship in varying sizes, as they do not have to fill an entire cargo hold in dry bulk ships. The two witnesses representing exporters, Sorenson and Jacobson, both told of their personal difficulties as small exporters in securing containers.

In addition to higher costs in shipping itself, exporters have been hit with high detention and demurrage fees, charges levied when freight containers can’t be picked up or returned to terminals within a “free time” window, even if it is short notice or due to delays at the ship or terminal. Exporters sometimes get caught in the middle, paying fees for what they can’t control, which a 2019 FMC Fact Finding called “punitive measures.” Jacobson and Sorenson both cited experience with “unfair” charges, including being given a day’s notice to return empty containers and carriers not alerting exporters of exporters to arrival, departure, and loading times, then applying financial penalties. In May 2020, the FMC issued an interpretive rule on detention and demurrage based on the Shipping Act to reprimand these “just and unreasonable” fees. Even so, a year later, Dye admitted that no shipper has been penalized and exporters continue to pay inflated and “abusive” fees.

Shipping problems can lead to American exporters losing reliable buyers. Sorenson discussed her experience with hog farmers, noting that over 1,000 containers of pork are currently sitting at West Coast ports waiting to be shipped. As the Japanese market specifically wants chilled pork, U.S. producers lose money, in some estimates a 75 percent loss of value, when they freeze meat due to shipping delays. This also positions the U.S. as an unreliable trading partner. If these shipping problems continue, American exporters could erode long-standing trade relationships and lose entire markets.


Lawmakers discussed the best legislative course of action to help American exporters. Dusty Johnson (R-SD) and John Garamendi (D-CA) plan to work together on legislation to provide the FMC with necessary powers to issue regulations, such as requiring carriers to obtain a statement of compliance from the FMC and prohibiting carriers who discriminate against American exports.

However, subcommittee ranking minority member Bob Gibbs (R-OH) argued that mandates were not the right course of action and asked about ways to incentivize shippers without manipulating the market. As Ponce De Leon pointed out, no one is questioning private shipping companies’ right to make money, but given they are operating out of public ports built with public money, this infrastructure should be used to support American exporters. How to do this effectively, without enacting mandates, is unclear.

Both Representatives and witnesses agreed that investing in informational infrastructure can expedite the shipping process, particularly for small exporters. Maffei argued that better data management and data sharing practices could allow shippers and exporters to get information in a timely manner. Using digital infrastructure at the Port of Los Angeles, shared Seroka, made cargo loading and unloading more efficient and helped vessels better navigate the port.


Deeply connected to informational infrastructure is investing in intermodal connections to optimize the supply chain make the port more efficient. Representatives questioned Seroka on why the Port of Los Angeles is not open 24 hours, with Seroka arguing that cargo and physical capacity issues at the port warehouses and connecting railroads, rather than staffing, is the main limiting factor. Coordinating with truck drivers is another issue, as federally mandated hours-of-service limitations, schedule complications due to late arriving ships, and poor communications result in truck drivers waiting in long lines at the port, sometimes maxing out hours before picking up any cargo.

Finally, in the past 10 years, according to Seroka, the federal government has over-invested in West Coast ports compared to East Coast ports by a ratio of 10:1. (Ed. Note: Carbajal did not have anyone from an East Coast port testifying to rebut this allegation.) Seroka argued the U.S. should improve ports on the East Coast and invest in their intermodal connections. As Ponce De Leon noted, while going from Asia to Los Angeles takes 14 days on the water and is typically a cheaper route, due to backups at ports and problems with rail connections, in some instances it could be faster and cheaper to sail through the Panama Canal to the East Coast, particularly as this would spread the cargo load to ports with ample capacity, as well as bringing some goods closer to their final destination on the populous Eastern Seaboard.

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