Impacts of Shipping Container Shortages, Delays, and Increased Demand on the North American Supply Chain
2167 Rayburn House Office Building and online via videoconferencing
Opening remarks, as prepared, of Subcommittee on Coast Guard and Maritime Transportation Ranking Member Bob Gibbs (R-OH):
Thank you, Chair Carbajal, and thank you to our witnesses for being here today.
Since the beginning of the traditional peak shipping season starting last August, United States ports have been experiencing a record surge in cargo imports. This surge is expected to continue at least through 2021, and some say into the second quarter of 2022. More than thirty container vessels routinely wait for space at the Ports of LA and Long Beach, and the Port of LA had its biggest month on record in May.
The surge is attributed to pent-up demand from the reduced cargo flow earlier in 2020, changes in consumer spending patterns given increased staying-at-home time in 2020 and 2021, increases in pandemic-related items like personal protective equipment, and decreased port throughput because of COVID’s impact on port operations, including increased testing, COVID infections in workers, and quarantining. I look forward to hearing if the witnesses agree with these popular explanations of the cargo surge.
This real-world pressure test of U.S. port capacity has led to container shortages for certain U.S. exports, particularly ag exports; pressure on intermodal rail connections; delays in receipt of merchandise for certain importers; shortages of chassis for drayage; and accusations of abuses regarding detention and demurrage charges – which I’ll note – ocean carriers and terminal operators deny.
Prior to the container surge, the Federal Maritime Commission was already conducting Fact Finding #29 regarding detention and demurrage. I understand that Fact Finding is now also looking at container shortages in some export markets. I look forward to Commissioner Dye’s update on the status of Fact Finding #29. I understand the Commissioner is the former Staff Director of this Subcommittee, and I’m also interested in learning more about her work on supply chain data transparency.
In addition, the Commission had issued interpretive guidance on detention and demurrage to ocean carriers and marine terminal operators, but the Hill continues to hear complaints, although I understand few complaints have been filed with the Commission. I joined the Chair and Ranking Member of the Full Committee and Subcommittee Chair Carbajal in writing the FMC to urge vigorous enforcement of subtitle IV of title 46, popularly known as the Shipping Act, if any violations are found.
I hope recommendations for industry practices to deal with future cargo surges will emerge from today’s hearing. The health of U.S. agricultural exports are life and death economic issues in rural districts such as Ohio’s Seventh District. Therefore, I’d like to strengthen the system to assure sufficient capacity in the supply chain to protect U.S. ag exports in the future.