Many Americans are worried about the long back-ups at U.S. ports. This is causing delays in American supply chain. It could also cause many gifts to arrive late for the holiday.
Many American farmers are facing the exact opposite problem: they have difficulty getting their products out of the country and to foreign buyers.
Rep. FOX Business spoke Wednesday to Dusty Johnson, R.S.D. He was the principal sponsor of the Ocean Shipping Reform Act, which passed the House by a vote of 364-60.
Johnson stated that the bill’s most important provisions deal with Asian ocean carriers who “unfairly discriminate” against American cargo. Johnson stated that the carriers will simply offload foreign goods at U.S. ports and then sprint back to Asia to bring more goods back to America, rather than filling up with American goods to export abroad.
Valley Queen is a South Dakota cheese producer. Johnson stated that they had 2 million pounds already sold lactose, which was sitting in a warehouse awaiting shipment. Johnson said that a container loaded with lactose they had recently sold… sat at the dock for 75 day.”
It started to spoil. It was $25,000 worth of loss on one container. He said that this is a common occurrence in the American agricultural supply chain and American manufacturing industry.”
Johnson also told Congress about the Iowa pork producer who claimed it was losing huge amounts of money due to the fact that its product has to wait on the dock for too long before being frozen.
“Asia loves chilled meat. They are fond of never-frozen pork. We ship a lot of pork to them. We have to freeze the pork after it sits on the dock for several days to prevent it from spoiling. Johnson stated that this eliminates the premium that Asians will pay for millions of dollars.”
This problem is widespread in the U.S. agricultural industry, especially in states that rely on West Coast ports for their goods. According to the Associated Press, 80% of shipments from abroad were cancelled in October according to the president of a California agricultural organization. Johnson stated that the U.S. ag producer contracts encourage this behavior from shipping companies.
Johnson stated that five of the major ocean carriers are foreign flagged and their interests were not aligned with those of the country.
He said, “Unfortunately, because it’s a oligopoly …. it’s something you have to accept or reject if you are an American ag shipping company.” “The terms usually state that you can cancel a container with liquidated damages of $100. Each container can contain up to $100,000 worth of goods.
Johnson stated that the Ocean Shipping Reform Act would set up “some basic rules of road” to combat this behavior.
He stated, “If you’re willing to use this shared infrastructure you’re going play fair and you won’t have unprecedented levels of rejection American cargo – which, as we’re witnessing, is actual rejection, a refusal to accept this cargo.”
Johnson stated that the bill isn’t protectionism, but “the opposite”, as it is meant to promote trade with Asia. It also addresses other aspects of the U.S. supply chain crisis, including long lines of shipping trying to bring goods into the U.S.
Johnson stated that the bill creates an environment in which efficiency is rewarded to ocean carriers. Johnson added that the bill contains provisions where data exchanges are possible and can be set up. They’re also incentivized for setting them up. Johnson stated, “That will make the entire system work a lot more efficiently.”
This efficiency could be more than just ensuring that Christmas presents arrive on time next year. The backlog of foreign goods has a negative impact on many sectors of the U.S. Economy, including agriculture.
FOX Business reported that “farmers in my district are already considering shortages of farm equipment and chemicals, along with skyrocketing prices, which will impact what are they able to plant next spring,” Esther Joy King (a Republican candidate for Illinois Congress) said.
If passed, the Ocean Shipping Reform Act will now be sent to the Senate. Johnson stated that the bill would be the largest update to shipping regulations for 30 years if it was signed by the president.