The conversation around supply chain woes has been dominated by imports — understandably so, as most Americans can see the impact in rising prices and empty shelves. But agricultural exports, a key driver of Washington’s economy, have also suffered.
What used to be a predictable process to fulfill orders now comes with uncertainty and a laundry list of questions, said Riley Bushue with the Northwest Horticultural Council.
“Are you going to be able to get a container? Can you get the booking? When you get the booking, is it going to stay on schedule or is it going to shift? It throws everything out of whack,” he said. “More than 25% of the apples and pears from the Northwest are exported, and ocean shipping is vital to making that happen.”
Fortunately, Congress is paying attention and is poised to pass legislation that will help ease the burden on America’s farmers. It is the kind of critical, bipartisan action that deserves to be celebrated.
Exporters have been hurt by the realities of the market. In the past two years, the cost to ship a container has increased between 300% and 500%, with U.S. producers losing up to 40% of their export value, according to the Agriculture Transportation Coalition.
While cost increases are felt by everyone, exporters are also affected by the shortage in shipping containers exacerbated by demand. This means that carriers can make more money by speeding an empty container back to Asia, to be filled with high-value products, than to wait for a U.S. exporter to ship their goods.
The mostly foreign-owned shipping container industry posted record profits of $150 billion last year.
In 2020, Washington-grown or -processed food and agriculture exports totaled $6.7 billion, according to the Washington State Department of Agriculture. Pass-through 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% decline in agricultural exports in the last six months of 2021. Vessels leaving port with mostly empty containers has been the norm since May of last year.
Whereas before, an empty container would be taken to Eastern Washington, for example, filled with produce, and then driven back, the backlog in containers, overloaded warehouses and shortage of drivers have led to delays. Shippers have little incentive to wait or are too eager to lard on penalties.
The Ocean Shipping Reform Act of 2022 requires ocean carriers to certify that late fees — known as “demurrage and detention” charges — comply with federal regulations. It prohibits carriers from unreasonably declining shipping opportunities for U.S. exports and shifts the burden of proof regarding the reasonableness of late fees from exporters to the ocean carrier that issues the charge.
The bill also authorizes the Federal Maritime Commission to self-initiate investigations of ocean carriers’ business practices and requires carriers to report to the FMC how many empty containers they are transporting.
“American exporters and their products are being left on the docks, and that’s why we wanted to act quickly,” said U.S. Sen. Maria Cantwell, D-Wash. “The American farmer, with growing season upon us, can’t afford to wait another minute for the Federal Maritime Commission to do its job and help police this market.”
Cantwell is a co-sponsor of the bill. The legislation was spearheaded by Minnesota Democratic Sen. Amy Klobuchar and South Dakota Republican Sen. John Thune. The House version also had bipartisan origins, and counts Washington U.S. Reps. Dan Newhouse, R-Sunnyside, and Kim Schrier, D-Issaquah, among its co-sponsors.
The measure, which was unanimously approved by the U.S. Senate recently, now moves to a conference committee that will reconcile the bill with the House version, which passed last year, also with strong bipartisan support.
The World Shipping Council, which represents large international shippers, said neither bill does anything to fix the logistics breakdowns that are at the heart of supply chain problems.
“Instead of passing legislation that would do nothing to address the nation’s supply chain congestion, Congress should seek real solutions that take a comprehensive, forward-looking view,” the group said in a statement. “That means continued investment in port infrastructure and promoting communication, innovation, and collaboration across sectors to further strengthen the intermodal transportation system.”
Shippers are right that this bill will not alleviate most of the supply chain’s ongoing problems, and Congress must continue to focus on needed infrastructure upgrades.
But by improving regulation to give exporters a fairer shot at getting their products to market, the Ocean Shipping Reform Act is a clear win for American agriculture and Washington farmers.
Lawmakers should act swiftly and move for a final vote.