‘Complex’ Supply Chain Woes Spur Congress to Seek to Clear Ports

Congress can do more to help unclog U.S. ports and transportation routes, potentially giving more power to federal regulators, the leader of the House subcommittee that oversees shipping said.

“This is not something where you fix one little thing, or you fix it all in a very straightforward fashion,” Rep. Salud Carbajal (D-Calif.), chair of the Coast Guard and Maritime Transportation Subcommittee, said in an interview last week. “It’s complex, and multifaceted that it warrants multifaceted solutions.”

The logjam has become a top concern for the Biden administration and U.S. lawmakers as the supply chain faces a shortage of workers and backlogged ports. The House Transportation and Infrastructure Committee is planning a hearing on freight challenges on Nov. 17, Carbajal said.

The shipping backups at major U.S. ports have caused shortages in goods and price surges as the holiday season approaches. The bottlenecks and material shortages are driving up the cost of everything from cars to construction and eating into companies’ profits. Last week Apple Inc. and Amazon.com Inc. warned they are losing money because they can’t meet demand for products.

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Mario Tama/Getty Images

A truck drives past cargo containers stacked at the Port of Los Angeles in San Pedro, the nation’s busiest container port, on Oct. 15, 2021. Surging inflation and supply chain disruptions are disrupting the global economic recovery.

Carbajal and members of the Biden administration are also urging Congress to pass the bipartisan infrastructure bill (H.R. 3684), which would provide about $17 billion for port infrastructure and waterways.

“That certainly will go a long way in making our ports more resilient and more equipped to handle more traffic,” Carbajal said.

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Empty Containers

One area where lawmakers are looking to do more is addressing shipping container problems.

Some shipping carriers have found it more lucrative to send empty containers back to Asia rather than use them for exports from the U.S. because there is a shortage of boxes and more demand for imports. The demand drove up container shipment prices as much as seven fold, Carbajal said.

“It demonstrated to us the complexity of the issue, but also the limitation that the Federal Maritime Commission, the FMC, authority actually had,” he said, referring to the U.S. government agency that regulates international ocean shipping.

The FMC is investigating the practice used by some shipping lines and port-terminal operators of tacking on fees for late pickup or overdue returns of containers. Last year, the commission announced rules during times of congestion to limit demurrage and detention penalties, charges imposed on merchants when they hold onto shipping containers, but not all shipping lines and port terminal operators have adhered to that.

Carbajal, during a June hearing, asked whether the reports of shipping companies refusing to carry cargo, charging excessive fees, and canceling contracts violate the Shipping Act, and why the FMC hasn’t addressed those problems.

“The commission is not allowed to, according to the current Shipping Act, adjudicate whether contracts had been broken. You may want to take a look at that,” Federal Maritime Commission Chairman Daniel Maffei told lawmakers. “The commission should maybe have a bigger role in reviewing contracts for clauses that are violations of the Shipping Act.”

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Coast Guard Bill

Carbajal said he sees several actions lawmakers can take, and he’s doing an inventory of all that’s being proposed to see what they can include in the Coast Guard reauthorization coming up in January that his committee will consider. The Coast Guard and the FMC were last authorized through fiscal 2021 under Public Law 116-283.

Reps. John Garamendi (D-Calif.) and Dusty Johnson (R-S.D.), members of the transportation committee, introduced a bipartisan bill (H.R. 4996) in August to revise federal regulations for the international ocean shipping industry, which they say would be the first major update since 1998.

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More than 150 companies and trade groups support the bill, which would prohibit ocean carriers from unreasonably turning down opportunities for U.S. exports, as decided by the FMC in a new rulemaking, and authorize the commission to investigate carriers’ practices and initiate enforcement.

“Foreign ocean carriers aren’t playing fair, and American producers are paying the price,” Johnson said. “It’s time for updated rules of the road.”

To contact the reporter on this story: Lillianna Byington in Washington at lbyington@bloombergindustry.com

To contact the editors responsible for this story: Sarah Babbage at sbabbage@bgov.com; Robin Meszoly at rmeszoly@bgov.com