With upwards of 60 anchored ships waiting 10-plus days to unload, the nation’s busiest port complex is now making headlines for even more troubling reasons.
A shipping container being hauled away from the Ports of Los Angeles and Long Beach Tuesday tumbled from a truckbed, crushing a parked car in Wilmington, according to ABC7 News. While no one was hurt, residents said neighborhood truck traffic has worsened as a result of the recent port backlog.
Phillip Sanfield, director of media relations at the Port of L.A., said the facility has moved an average of 900,000 containers per month since summer of 2020. “In spite of the best efforts of terminal operators and longshore workers, terminals remain beyond full capacity,” he said. While 50 percent more ships are being worked at one time than before the pandemic, towering container stacks continue crowding the tarmacs.
In response to a Federal Register notice from the Department of Transportation, the American Apparel and Footwear Association (AAFA) submitted comments urging government and industry stakeholders to come together to enforce existing laws and end behavior that it deems damaging to brands as they head into the holiday season. The AAFA is pushing for support and regulatory action to address the “unreasonable practices and excessive and unjust fees” freight forwarders charge for container space and shipping—measures it believes further harm consumer goods companies.
“The current shipping crisis has crippled every component of the country’s transportation industrial base, devastating America’s supply chains and threatening America’s economic recovery,” AAFA president and CEO Steve Lamar wrote to deputy assistant secretary for economic policy Michael Shapiro. “Unless immediate steps are taken, this holiday season will be marked by empty shelves, inflation, and lost jobs.”
The administration announced last week that the San Pedro Bay complex would extend hours of operation to deal with the crippling backlog. However, Lamar called the move toward 24-7 operations “largely symbolic,” insisting that more action is needed from the Federal Maritime Commission (FMC) to address carrier price gouging while brands wait on products that should already be on store shelves.
The White House Supply Chain Disruption Task Force was established in June to address these challenges, and in July, President Biden signed an executive order urging the FMC to “consider further rulemaking to improve detention and demurrage practices and enforcement of related Shipping Act prohibitions.”
“These issues go through the entire chain, from ship to shelf,” transportation secretary Pete Buttigieg told ABC7 this week. “That’s why we’re not just working with the ports. It’s the truckers, the rail companies, the operators and also those retail companies that are at the other end of those supply chains.”
But September’s annual inflation rate reached 5.4 percent—a trend that Lamar believes will continue to accelerate without the administration’s intervention. Many of the AAFA’s 1,000-plus members have reported record high shipping rates week over week, reaching up to 10 times what they paid during the same period last year. The cost of shipping even exceeds the value of the cargo in some cases.
“Shipping contracts are routinely ignored with many containers being removed from ships and left behind at origin despite payment of exorbitant container fees,” he added. Because business is consolidated among a limited group of carriers, brands have little recourse when their containers are bumped. Meanwhile, even containers that manage to make it to their destinations end up languishing at U.S. ports.
In July, the Footwear Distributors and Retailers of America (FDRA) asked President Biden’s administration to take action on the issue.
“With an artificially constricted supply of vessel capacity controlled by a small number of ocean carriers, it has become increasingly difficult for companies to secure vessel space,” president and CEO Matt Priest wrote, noting that many footwear companies had been forced to pay space guarantee surcharges, with some seeing fourfold increases in shipping fees. Other FDRA members reported that carriers refuse to honor existing contracts.
“Often, the best-case scenario is agreeing to pay exorbitant rates to book space on a vessel with a sailing date that is delayed, sometimes for weeks,” Priest added. “This practice destroys speed to market efforts, results in lost sales, and vastly multiplies costs for U.S. businesses during an already difficult time.
After facing the costly challenges associated with bringing product in from overseas, “members face the final hurdle of significant (and spiraling out of control) delays to get containers out of ports or rail yards,” Lamar wrote in his letter this week. A dearth of truckers and long turn times for moving containers in and out of the complexes compound the delays and expenses, while duties on truck chassis imports contribute to a severe equipment shortage.
“Some of the shippers that are collecting cargo from the Port are using containers (and the chassis they sit on) as storage, which prevents the equipment from cycling back into the system,” Sanfield added. Prior to the pandemic, the process of taking a container, unloading it, and returning the equipment to the port took about four days. Today, that has nearly doubled.
“The bottom line: the actions taken by the administration so far—while all steps in the right direction—have failed to move the needle to address the quickly worsening crisis,” Lamar said. Now, the AAFA urged the White House to marshal all industry stakeholders—from logistics providers to government agencies and even the National Guard or Naval ports—to develop short-term solutions addressing the backlog.
Enhanced coordination between cargo owners, marine terminals and carriers is imperative to “increase the rate of productive gate appointments per shift”—or pickups of containers—ands accommodate the return of empty containers, Sanfield said. The port recently announced a pilot program called Accelerate Cargo LA to accomplish this directly.
AAFA also urged the FMC to take a hard line with bad actors, noting that the commission has already conducted “numerous inquiries on excessive and unjust fees” from freight companies seeking to capitalize on the chaos. Those probes must now be converted to action, Lamar wrote, using additional tools from the Department of Justice.
The “immediate approval” of the industry-endorsed, bipartisan Ocean Shipping Reform Act of 2021 (OSRA 21) (H.R. 4996) would aid in fixing the issue, he said. In September, a coalition of 152 companies and trade associations representing U.S. importers, exporters, transportation providers and other supply chain stakeholders submitted a letter of support to Congress endorsing the legislation, which would limit fees and penalties charged by ocean carriers and marine terminals.
AAFA once again urged tariff relief for its members, stating that suspending the Section 301 duties on China implemented by President Donald Trump would aid companies hurt by the shipping crisis. Pausing the tariffs “would help those companies offset the enormous freight costs burden they are now forced to absorb” and allow for the import of much-needed chassis, Lamar wrote.
“The Biden Administration keeps talking about a worker-centered trade policy, but there is very little they’ve pushed that addresses the needs of the more than 13 million American workers whose jobs are directly tied to imports,” he told Sourcing Journal. “Imports work. Tariffs don’t.”
Lamar suggested suspending the tariffs and refunding a portion of the $110 billion doled out by U.S. companies “so they can survive this very real, long-term shipping crisis that currently has no end in sight.”