When Will Things Get Better?

By Nate Herman

We are well into a new year, yet we are still talking about the same old things.

The shipping crisis is still bad. Dozens of ships are still sitting off the Ports of Los Angeles and Long Beach. Ridiculously high shipping rates are now getting baked into shipping contracts. And carriers are still charging companies unfair and exorbitant detention and demurrage fees for situations that are completely out of your control. Then you add new COVID lockdowns in Shenzhen and other parts of China, a war in Europe, and the looming July 1 expiration of the West Coast Port labor contract, and things don’t look like they are going to get better anytime soon.

On the trade side, our industry still faces the 25% Section 301 tariffs on our imports from China. And, 15 months after it expired, Congress still has taken no action to renew the Generalized System of Preferences (GSP) program, which provides duty-free access for U.S. travel goods imports from developing countries like Cambodia, Myanmar, Thailand, Pakistan, Indonesia, and Sri Lanka.

But, as the world begins to bloom as we enter spring, so does our hope that things will get better.

Most importantly, with the end of COVID restrictions, consumer demand has blossomed, with travel returning to levels not seen in years.

And the shipping crisis is being taken seriously at the highest levels. For the first time ever, a President referenced the shipping crisis in a State of the Union (SOTU) address to the nation, with President Biden saying, “I’m a capitalist, but capitalism without competition isn’t capitalism. It’s exploitation – and it drives up prices. When corporations don’t have to compete, their profits go up, your prices go up, and small businesses and family farmers and ranchers go under. We see it happening with ocean carriers moving goods in and out of America. During the pandemic, these foreign-owned companies raised prices by as much as 1,000% and made record profits. Tonight, I’m announcing a crackdown on these companies overcharging American businesses and consumers.”

While those sentiments have yet to translate into actions that have made a difference, it has provided extra momentum to the TGA-supported Ocean Shipping Reform Act, legislation that would begin to reign in ocean carriers that Congress is poised to approve and send to President Biden for his signature.

And Congress is right now debating larger competitiveness legislation that would renew the GSP program and re-establish a process that would allow certain products to be exempted from the China Section 301 tariffs.

So, while we are not there yet, there are two things that we can count on in our industry — our resilience and, like the awakening of nature in spring, our hope springs eternal.  And with light starting to come through the cracks, we have a good reason to hope.