Senators Ask FMC to Consider Penalizing Carriers for Low Export Capacity
On June 16, 2010, Senate Agriculture, Nutrition and Forestry Committee Chairman Lincoln (D) and Ranking Member Chambliss (R) sent a letter to Richard A. Lidinsky, Jr., Chairman of the Federal Maritime Commission, expressing concern with reports that U.S. agricultural exporters are experiencing serious service issues with the foreign-flagged ocean carrier industry.
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Exporters May Wait a Month for Carriers, Difficult to Get Containers
According to constituent reports and recent media stories, U.S. exporters may be forced to wait as long as a month to secure space on an ocean carrier compared to earlier wait times of about a week. In some parts of the country, obtaining the necessary containers is becoming increasingly difficult as well.
These service interruptions, along with frequent rate hikes, are occurring despite the fact that most U.S. shippers enter into 12-month service contracts with the ocean carriers for fixed rates during the period. These contracts are supposed to ensure that the carriers will provide the necessary weekly equipment and vessel space consistent with each individual agreement.
Ability to Expand Exports Depends on Vessel Capacity, Container Availability
The Senators noted that President Obama has launched a National Export Initiative aimed at doubling U.S. exports over the next five years and agriculture products represent a significant share of bulk and container trade. However, the ability of agricultural exporters to expand markets abroad is dependent on adequate ocean-going vessel capacity and container availability at inland locations. If this critical link in the export chain does not function fairly or efficiently, U.S. shippers will be unable to get agricultural products to key overseas markets.
Senators Ask FMC to Identify Steps it is Taking to Address These Issues
Additionally, Chambliss and Lincoln requested the FMC to identify steps it is taking to address these issues, including the ability to penalize carriers for egregious practices. The Senators added that they support the FMC’s official investigation into space and equipment shortages and look forward to the results of this inquiry.
Asks FMC if it Needs New Authorities
They added that they would appreciate the FMC’s perspective concerning the specific authorities that it has available to ensure the ocean carriers’ honor their service contracts with U.S. shippers, including the ability to penalize carriers for egregious practices. If the FMC lacks such tools, the Senators would welcome a discussion of ways to potentially strengthen the FMC’s authority with the carriers.
(See ITT’s Online Archives or 06/17/10 news, 10061686, for previous BP summary of this letter.
(See ITT’s Online Archives or 03/18/10 news, 10031805, for BP summary of FMC ordering an investigation into inadequate vessel space and containers.)