I Am Not Dead Yet – Part Deux
By Nate Herman
A little over a year ago, in the face of declarations of victory over the shipping crisis, I took to these pages to declare that, in the immortal words of Monty Python, the shipping crisis is instead telling everyone “I’m not dead yet!”
On a call with the White House last week, President Biden’s Port Envoy, Stephen Lyons, declared the shipping crisis dead yet again. Yes, shipping rates have plummeted back to earth, and the weeks long delays to get your containers out of the ports are no more.
But the real question we must ask is why. Have the underlying problems at the ports that led to the shipping crisis been fixed? No. Have ocean carriers turned over a new leaf after securing record profits? No. Just the opposite, service from ocean carriers is at its lowest level ever. And the lower rates have been partially offset by dozens of new arbitrary fees created by the carriers. Have the railroads changed the broken system that led to massive congestion, cargo stacking, and suspension of routes? No.
So, why is the situation better? As you all know, a combination of companies holding too much inventory, in many cases the wrong inventory, and demand sliding to below pre-pandemic levels in the face of inflation and consumers moving away from goods to services.
So, what happens if demand picks up again, or negotiations towards a new West Coast port labor contract (the old contract expired in July) falls apart, or railroad workers threaten another strike, this time over railroad safety and sick leave?
The corpse that is the shipping crisis will come out of the shadows and haunt us once again. And no one is doing anything about it.
That is not quite true: the TGA-supported Oceans Shipping Reform Act (OSRA) that Congress approved last year has finally emboldened the shipping industry’s oversight agency, the Federal Maritime Commission (FMC), to do what it is supposed to do, aka oversight.
The FMC has imposed new rules governing unreasonable detention and demurrage, and has made it easier for shippers to bring cases against carriers. And shippers have responded, bringing more FMC cases against carriers in the last year than shippers did in the previous 10 years combined.
If another crisis looms, hopefully the FMC will step up and reign in the ocean carriers. And, of course, TGA will continue to push the FMC, Congress, and the White House to act now to prevent another shipping crisis.
In the meantime, to paraphrase an old adage, “the shipping crisis is dead, long live the shipping crisis.”