A bipartisan group of U.S. senators has called on the Federal Maritime Commission to quickly resolve what they call “unreasonable practices” of ocean carriers that are hindering U.S. farm exports.
Reports began emerging last fall that carriers were delaying the export of hundreds of millions of dollars worth of U.S. agricultural goods, and instead immediately returning empty containers to be filled with more profitable Chinese merchandise heading stateside.
Once incoming containers are emptied of their cargo, they usually go to rural areas, where they are loaded with agricultural products such as apples, hay, potatoes and lumber before they are sent back to ports for the trip to Asia.
Twenty-four senators — including Senate Agriculture Chair Debbie Stabenow — signed a letter March 3 to Commission Chairman Michael Khouri, calling the actions by some carriers unfair and a potential violation of the Shipping Act of 1984.
“If the reports are true, such practices would be unreasonable, anticompetitive and hurt millions of producers across the nation,” the senators wrote.
Farmers and agricultural exporters echoed those concerns, saying the lack of access to containers and vessels has delayed shipments and threatens to tarnish their reputation as reliable trading partners.
Shelly Boshart Davis, whose family business specializes in baling, hauling and selling grass straw from Willamette Valley farms to customers in Japan and South Korea, said the global pandemic caused a whiplash of sorts in the international trade community.
Early in the crisis, Davis — who is also a Republican state representative from Albany — said the flow of goods was reduced to a trickle. Americans weren’t buying, ships were halted and even the companies that manufacture cargo containers slowed production due to reduced demand.
“It kind of threw the world into a tizzy,” she said.
Then, as the months wore on, the floodgates opened. Consumers changed their buying habits, ordering products online, many from overseas. Ships’ capacities were suddenly overwhelmed, and shipping companies struggled to keep up.
“I’ve been doing this long enough, and it just takes time for the market to correct itself,” Davis said.
With such high demand for imports, Davis said carriers realized it would be more profitable for them to expedite sending empty containers back to their point of origin, rather than wait to refill those containers with agricultural products.
That has exacerbated an already difficult situation at ports, with unprecedented congestion and record container volumes.
Davis and her business partner, Macey Wessels, operate Boshart Trucking, which provides grass straw baling and transportation services for more than 40 farmers in the Willamette Valley.
Davis is also vice president of BOSSCO Trading, working with customers in Japan and South Korea to sell grass straw primarily for animal feed. In a given year, Davis said she ships around 40 containers of straw per week.
But with containers now at a premium, she said roughly half of their shipments are delayed by a week or two, and 25% are delayed 2-5 weeks.
“I would say it’s frustrating,” Davis said. “(Our customers) like schedules. We pride ourselves on being able to produce what they want, on time. That’s been a struggle.”
In addition, Davis said carriers have dramatically raised shipping costs for agricultural goods. For example, she said one container heading for Shibushi, Japan, now costs $1,500, a 50% increase since December.
“These are huge multi-national global companies that us little guys have a hard time going up against,” Davis said. “If there are any unfair trading practices happening, then the (maritime commission) definitely needs to take a look.”
Gary Frederickson, president of Oregon Hay Products in Boardman, said the disruptions caused by carriers returning empty containers to China is predatory and damaging to all West Coast agricultural exporters.
“These actions are causing irreparable short-term harm to U.S. exporters and potentially permanent long-term harm as the U.S. becomes an unreliable source of products,” he said.
Stuart Follen, president of SL Follen Co., which owns and operates Oregon Hay Products, said the Shipping Act of 1984 does not allow carriers to unilaterally limit access for U.S. companies trying to conduct business.
SL Follen Co. annually ships approximately 65,000 tons of hay products to Asia and the Middle East, according to the company’s website.
“Ocean carriers, by unnecessarily restricting access to ocean containers and shipping them back to Asia empty, are damaging countless American farmers, agricultural processors and international trading companies throughout the U.S. and especially along the West Coast,” Follen said.