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Chick-News.com Poultry Industry News, Comments and more by Simon M. Shane

Export Restraints Result in Congressional Action

08/11/2021

Representatives John Garamendi (D-CA) and Dusty Johnson (R-SD) have introduced the Ocean Shipping Reform Act of 2021.

 

Exporters of agricultural products have experienced significant losses due to a shortage or non-availability of shipping containers in addition to demurrage and other fees.  In many cases shippers' intent on expediting turnaround in congested U.S. West Coast ports are returning empty containers to Asia to re-ship goods eastbound to meet demand.

 

The Act will place a greater pressure on ocean carriers to practice more reasonable policies to export U.S. agricultural products including meat, fruit and other perishables for markets in Asia.  The bill is strongly supported by a wide range of agricultural associations including the National Pork Producers Council, the North American Meat Institute and others.

 

Predictably the ocean freight companies have commenced an intense lobbying campaign through their organization, the World Shipping Council that is actively questioning the contentions and data that led to the drafting of the Ocean Shipping Reform Act of 2021.

 

The cost of ocean freight may be tracked using the Baltic Dry Index.  In May 2020, the index reached a low of 500 rising sharply to 1,800 in June of that year with a steady rise to the current level of 3,292 at the end of July 2021, representing the highest level since September 2017.  The current cost of shipping a 40-foot container from a port in China to the U.S. West Coast now exceeds $20,000. This compares to $11,000 at the end of July 2020 and is a fivefold increase from August 2020.  COVID-related delays of 7 to 8 days in ports are cited as a reason for the surge in container freight rates.

 

In past years, ocean freight companies held back on ordering new vessels.  The current surge in demand and the need to use vessels that are more environmentally acceptable has simulated orders for an additional 20 percent capacity. New vessels and containers will only be available at the end of 2023.


 
Copyright © 2024 Simon M. Shane