In the past few weeks, everyone from President Biden to Port Directors and pundits have claimed that we are now seeing the other side of the shipping crisis, the very same shipping crisis that has led to exorbitant and unjust costs, empty shelves, and higher prices at the cash register for the fashion industry this holiday season. The pundits claim that we can see the light at the end of the tunnel. But, to quote the immortal words of Monty Python, the shipping crisis is instead telling everyone “I’m not dead yet!”.
The White House and pundits point to the lower number of ships waiting outside the Ports of Los Angeles and Long Beach, only 26 on December 9, the clearing of some cargo off docks, and slightly slower shipping rates as their evidence that the shipping crisis’ days are numbered.
Regrettably, the reality is anything but that.
First, the ship numbers. In November, the terminal operators, the ports, and the southern California air quality regulators agreed that dozens of ships sitting out in San Pedro Bay was not really good for the environment, or for optics either. So, they reached an agreement to stage ships waiting at anchor, waiting to enter the ports, as far as 150 or 300 miles out. The 26 ships at anchor only counts the ships within 25 miles of the ports. Some have estimated the number of ships at anchor is really around 100 ships. Further, the real number that matters is how long those ships have to stay at anchor before they can berth at the ports. And that number has been creeping up over the last few months, reaching and surpassing record levels, with the Port of LA now reporting average wait times of 19.7 days and the Port of Long Beach reporting a whopping average 28.6 day wait time, a whole month.
Second, the clearing of cargo off docks. After the Ports of LA/Long Beach announced on October 25 that they would impose a so-called “super demurrage fee” on long-standing containers on docks, a fee that every ocean carrier said they would pass on to you, the shipper, there was an effort to move cargo off docks. Instead of that cargo going to you, a lot of that cargo was, in many cases, instead moved to off dock facilities. The ports, citing progress in reducing cargo on the docks, has repeatedly delayed the implementation of the fee. However, that progress has appeared to stall as the ports have cited the same 37% reduction in containers for the last three weeks.
Third, the decline is shipping rates has stalled and, on some routes, has started to increase again. The reality, however, is that even if rates continue to stay flat, or even decline slightly, those rates are still almost 4 times the rates you were paying last year.
And those pundits are ignoring the other “truths” you, the shippers, are now facing. On the U.S. side, terminal operators have started to charge shippers fees for missed appointments, and, while the Ports of LA/Long Beach have delayed it another week, other ports are now adopting the super demurrage fee for cargo stuck on the docks, all fees that will be paid by us, the shippers. More unreasonable fees that you have to pay for situations that are completely out of your control.
Add to that China’s new data restrictions making it more difficult to track ships in China, feeder operators in the Pearl River Delta region suspending service between now and Chinese New Year because of new quarantine requirements for ship crews, and a surge in blank sailings from Asia to the U.S. West Coast – all leading to more delays and more confusion.
And, finally, the current labor contract for longshoremen at U.S. West Coast ports expires on July 1, 2022. The longshoremen have already rejected an extension of the current contract. And, if past is prologue, contract negotiations can lead to strikes, work slowdowns, or lockouts.
To paraphrase Monty Python, the shipping crisis looks to be very much alive and “feeling much better”.
But there are small signs of goods news on the horizon. Thanks to the efforts of the American Apparel & Footwear Association (AAFA), and many others, we now have the full attention of the White House and the press, at least until December 25. And they are trying, not always successfully, to break the logjam. We keep pushing the need to bring all of the stakeholders to the table and lock them in a room until they come up with real solutions to bring this crisis to an end. We keep calling for immediate relief for the fashion industry by eliminating the China Section 301 tariffs and immediately renewing the Generalized System of Preferences (GSP) program and the Miscellaneous Tariff Bill (MTB).
And Congress is listening. In fact, on December 8, the House approved key legislation supported by CFDA, AAFA, and others in the fashion industry that will give the Federal Maritime Commission (FMC) real teeth over the ocean carrier industry to stop price gouging, contract violations, and unfair late (detention and demurrage) fees.
In the end, if we all work together, we can finally bring the shipping crisis to a quick and timely death.
Leave a Reply
You must be logged in to post a comment.