The conversation about supply chain issues has been dominated by imports — understandably, since most Americans can see the impact of rising prices and empty shelves. But agricultural exports, a key driver of Washington’s economy, have also suffered.
What was once a predictable process for fulfilling orders now comes with uncertainty and a long list of questions, said Riley Bushue of the Northwest Horticultural Council.
“Are you going to be able to get a container?” Can you get the reservation? When you get the reservation is it going to stay on schedule or will it change? It messed up everything,” he said. “More than 25% of the Northwest’s apples and pears are exported, and shipping is key to making that happen.”
Fortunately, Congress is paying attention and is about to pass legislation that will help ease the burden on American farmers. This is the kind of critical, bipartisan action that deserves to be celebrated.
Exporters suffered from market realities. Over the past two years, the cost of shipping a container has increased by 300-500%, with US producers losing up to 40% of the value of their exports, according to the Agriculture Transportation Coalition.
While cost increases are felt by all, exporters are also affected by the shortage of shipping containers exacerbated by demand. That means carriers can make more money shipping an empty container to Asia, to be filled with high-value product, than waiting for a US exporter to ship their goods.
The largely foreign-owned shipping container industry posted record profits of $150 billion last year.
In 2020, exports of food and agricultural products grown or processed in Washington totaled $6.7 billion, according to the Washington State Department of Agriculture. Direct exports from other states — including soybeans, wheat and corn — added another $10.4 billion leaving the state’s ports.
The Northwest Seaport Alliance, a partnership between the ports of Seattle and Tacoma, reports a nearly 30% drop in agricultural exports in the last six months of 2021. Ships leaving the port with mostly containers voids have been the norm since May last year.
Where in the past an empty container would be transported to, say, eastern Washington, filled with produce, then turned back, the backlog of containers, overcrowded warehouses and shortage of drivers have led to delays. Shippers have little incentive to wait or are too eager to pay penalties.
The Ocean Shipping Reform Act of 2022 requires shipping carriers to certify that late fees — known as “demurrage and detention” charges — comply with federal regulations. It prohibits carriers from unreasonably denying shipping opportunities for U.S. exports and shifts the burden of proof regarding the reasonableness of late fees from exporters to the shipping carrier issuing the charges.
The bill also authorizes the Federal Maritime Commission itself to initiate investigations into the business practices of shipping carriers and requires carriers to report to the FMC the number of empty containers they transport.
“American exporters and their products are being left behind, and that’s why we wanted to act quickly,” said U.S. Senator Maria Cantwell, D-Wash. “The American farmer, with the growing season approaching, cannot afford to wait another minute for the Federal Maritime Commission to do its job and help control this market.”
Cantwell is co-sponsor of the bill. The legislation was led by Democratic Minnesota Senator Amy Klobuchar and Republican South Dakota Senator John Thune. The House version also had bipartisan origins and counts U.S. Representatives from Washington Dan Newhouse, R-Sunnyside, and Kim Schrier, D-Issaquah, among its co-sponsors.
The measure, which was recently unanimously approved by the U.S. Senate, is now going through a conference committee that will reconcile the bill with the House version, which passed last year, also with a strong bipartisan support.
The World Shipping Council, which represents large international shippers, said neither bill did anything to address logistics issues that are at the heart of supply chain issues.
“Instead of passing legislation that will do nothing to address the nation’s supply chain congestion, Congress should be looking for real solutions that take a holistic, forward-looking view,” the group said. in a press release. “This means continued investment in port infrastructure and the promotion of communication, innovation and collaboration across sectors to further strengthen the intermodal transport system.”
Shippers are right that this bill will not fix most of the lingering supply chain issues, and Congress needs to continue to focus on necessary infrastructure upgrades.
But by improving regulations to give exporters a fairer chance to get their products to market, the Ocean Shipping Reform Act is a clear victory for American agriculture and farmers in Washington.
Lawmakers should act quickly and move for a final vote.