"Exporting air": U.S. lawmakers target empty shipping container backlog
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Containers and cargo ships at the Port of Los Angeles on Jan. 19, 2022 in San Pedro, California. Photo: Qian Weizhong/VCG via Getty Images
Federal legislation aimed at providing relief to Minnesota companies hamstrung by an international shipping bottleneck is nearing the finish line.
Driving the news: A bill co-sponsored by U.S. Sen. Amy Klobuchar that seeks to curb the practice of cargo ships prioritizing empty containers over American-made goods at U.S. ports was approved with unanimous support last week.
- Klobuchar tells Axios she expects action soon to square her bill with a similar measure that cleared the House of Representatives last year.
Why it matters: Supply chain woes are leading to long wait times and high costs for companies, including those based here in Minnesota.
- Those costs can stress businesses and be passed on to consumers in the form of higher prices.
The big picture: Increased demand for goods here in the U.S. has created a situation where shippers can make more by prioritizing imports, as Axios' Hope King has reported, even if it means cargo carriers setting sail with empty containers that can be refilled overseas.
- As a result, ocean cargo carriers have been rejecting some U.S. exports since at least the fall of 2020, according to a CNBC investigation.
Zoom in: Joe Smentek, executive director of the Minnesota Soybean Growers Association, tells Axios local producers of specialty soybeans are having "huge issues trying to get on the ships" to make it to food markets in Asian countries.
- One farmer is monitoring a shipment that has been sitting in a container in the Pacific Northwest for 90 days, according to Smentek.
Details: The bill sets new limits around fees, directs the Federal Maritime Commission to draft rules prohibiting shippers from "unreasonably declining" U.S. exports and gives the commission more authority to regulate and investigate business practices.
What they're saying: Klobuchar says the bill will level the playing field by targeting international shipping conglomerates that are "exporting air" while there are "American products that are just left behind."
- "They get delayed and that is really bad for jobs in our state," she says.
The other side: The World Shipping Council, which represents Maersk and other shipping giants, said in a statement that the bill "addresses none of the root causes of the U.S. landside congestion."
- The group has called for port infrastructure investments and other "forward-looking" fixes instead.
The catch: Even if the measure makes it into law, finalizing the new rules will take months.
Yes, but: Klobuchar tells Axios she thinks a strong message from Congress will trigger behavior change from the industry.
- Continuing with "severe overpricing and not shipping things," could trigger more action from lawmakers, she added.
What's next: Klobuchar says while she initially thought an agreement between the two chambers would be included in a broader workforce and economy package, she thinks there's support for passage of a stand-alone compromise bill.
- She says she's confident President Biden would sign the measure if it lands on his desk.
The bottom line: Smentek says while the proposed changes won't be a "silver bullet" to solve the crisis, they will "shed light" on a shipping industry often shrouded in secrecy.
- "It'll make it more fair and transparent of the way they operate. And that's half the battle right now."