Large fees, coupled with already high shipping costs, are causing concern for U.S. shipping companies, according to The Wall Street Journal (subscription).
Why it matters: “U.S. lawmakers and regulators are taking a hard look at the charges and other shipping practices that critics say have sharply raised costs for American importers and hamstrung the ability of exporters to reach overseas markets.”
Logjams lead to increased fees: Ports around the United States and the world are backed up, causing many containers to sit for extended periods of time. In response to the delays, carriers are levying major fees on shippers. The shippers say the fees are unfair because the delays are entirely out of their control.
Federal Maritime Commission fee analysis: “In a recent audit of carriers, the FMC estimated that from July to September last year, eight of the largest ocean carriers charged fees totaling $2.22 billion. The sum was a 50% increase on the previous three months, though it is unclear how many of the charges were questionable.”
Sitting boxes: From June 2020 to December 2021, the monthly share of imported containers at the ports of Long Beach and Los Angeles that had to wait longer than five days for handling increased from less than 5% to nearly 50%. Similar increases have occurred at other ports.
Increased shipping costs: As a result of pandemic-related supply chain stress, the average cost to ship a container from Asia to the West Coast of the United States (before fees) has increased by nearly 500% to $20,000 in the last year, according to the Freightos Baltic Index.
New legislation proposed: Sens. Amy Klobuchar (D-MN) and John Thune (R-SD) introduced legislation last week that would change the Ocean Shipping Reform Act. The new legislation would create new restrictions on coordination and alliances between carriers, prevent shipping lines from unreasonably rejecting exports and restrict carriers’ ability to impose added fees on container handling.
What we’re saying: “Manufacturers have been hit hard by historically high shipping fees and volatile delivery schedules since the pandemic began,” said NAM Director of Infrastructure, Innovation and Human Resources Policy Ben Siegrist. “Through the NAM Ports and Ocean Shipping Task Force, we’ve been working closely with regulators at the Federal Maritime Commission and policymakers on Capitol Hill to address issues like these extraneous fees and support these sensible and appropriate steps to rein in shipping costs on the essential parts and products that keep the American economy running.”