Background

The Biden administration is calling on both Congress and the Federal Maritime Commission to take additional actions to address supply chain snarls.

Much of the focus in recent months has been how the logjam of cargo containers at U.S. ports is slowing imports, making it difficult to stock retailers’ shelves and move inputs to U.S. factories. However, a recent blog post on the White House website said this problem is negatively affecting U.S. exports as well.

For example, the share of cargo containers shipped from the U.S. to Asia that are empty has risen from about 55 percent in the five years preceding the COVID-19 pandemic to more than 70 percent so far this year. The post attributed this change to a sharp increase in the cost of shipping between the U.S. and Asia, which has made it more profitable for ocean carriers to quickly load empty containers or return to Asia without a full ship instead of waiting for loaded containers to get into the U.S. port of export.

The White House said this situation “raises questions about the fair treatment of American exporters and importers” by the three global shipping alliances that control about 80 percent of the global shipping market (up from 29 percent just a decade ago) and 95 percent of the East-West trade lanes. The post urged the FMC to “use all of the tools at its disposal” to address this “lack of competition,” such as by challenging carrier agreements if they “produce an unreasonable reduction in transportation service or an unreasonable increase in transportation cost or … substantially lessen competition.” Noting that the FMC itself is a relatively small agency, the post said the Department of Justice “stands ready to lend the FMC its expertise and support” in such efforts.

The White House also called on Congress to help the FMC by increasing its funding, which is currently around $30 million a year, and providing it “an updated toolbox to protect exporters, importers, and consumers from unfair practices.” The post highlighted the bipartisan support for the Ocean Shipping Reform Act of 2021 and said this bill “includes good first steps towards the type of longer-term reform to shipping laws” that would “improve our ability to get goods in and out of this country more quickly and cost effectively, and strengthen opportunities for U.S. businesses to connect with global markets.”

Sandler, Travis & Rosenberg is continuing a campaign to advocate with federal regulators and lawmakers on solutions to the supply chain crisis. For more information on this campaign and how to participate, please contact Ned Steiner at (202) 730-4970 or via email.

Copyright © 2021 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.

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