Out of the Frying Pan & Into the Fire
By Nate Herman
The last year confronted the industry with unprecedented challenges. Not only did the economy drop off a cliff but travel came to a dead stop.
However, the past few months have given us some hope. The high vaccination rates and the subsequent reopening of the U.S. economy are looking to usher in a summer of travel, resulting in a positive change in sales for the first time in over a year.
But just as we are seeing light at the end of this very long tunnel, the tunnel seems to have suddenly become a lot longer.
Why? Because now that demand has returned, we have another, possibly even bigger problem. Getting the supply.
The shipping crisis that has brought our nation’s ports to a standstill threatens our industry’s recovery. Every month, the shipping crisis has only gotten worse, leaving critical industries without key inputs, creating significant delays that threaten to leave store shelves empty, and imposing significant new costs on our industry at a time when we can least afford it. Without action, the crisis will not abate until 2022, or beyond, calling into question whether we can provide the product consumers want, at the price consumers want, during our peak selling seasons – summer, back-to-school, Labor Day, and the all-important holiday shopping season.
How did we get here? The factors are many: lack of access to empty containers; labor shortages at ports caused by surges in COVID cases; carriers charging shippers 4-5 times contract rates and then still “rolling” them off ships; lack of available chassis to move containers; restrictions on truckers on when they can access containers at ports; limits on truckers’ ability to bring in empty containers and take out full containers (so called “dual transactions”); lack of capacity at ports to handle ever larger ships; lack of air cargo capacity; unreasonable and arbitrary fees on shippers at all points in the shipping process; and more.
Today, ocean carriers are announcing record profits and ports are announcing record shipments while you, the industry, are paying record prices and being charged excessive and unreasonable fees. Even if you pay these high prices, you are faced with immense uncertainty – delays of days or weeks to receive your cargo, if you are event able get the product on a ship in the first place. But this problem is much bigger than just our industry, negatively impacting every facet of the U.S. economy.
Yet, we have seen no action from the Biden administration or Congress to address any part of this crisis, much less working towards a solution to bring this looming disaster to an end.
We need action now. First, we need the U.S. government to enforce carrier contracts and stop unreasonable and arbitrary fees. Second, we need Congress and the Biden administration help us deal with these spiraling costs by removing the biggest cost on our industry – tariffs. We need President Biden to end the 25% punitive tariffs on China and we need Congress to renew the Generalized System of Preferences (GSP) program. And, finally, the U.S. government must bring all stakeholders together ASAP – carriers, port authorities, terminal operators, truckers, shippers, rail operators, etc. – to force them to sit down at the table and hash out solutions to bring this mess to an end.
The Travel Goods Association (TGA) will lead the industry’s advocacy by raising awareness of the impact of this crisis on our industry and driving policymakers to take action to end it.
For more information, please contact TGA’s Nate Herman at email@example.com or 301-775-7633.