Buddy, Can You Spare a Can?
According to a CNBC investigation, shipping lines rejected U.S. export containers worth hundreds of millions of dollars during the last quarter of 2020. Empties were loaded and shipped back east to be filled with Chinese exports.
But press reports blaming “congestion” are off the mark. Those empties are getting moved and loaded on ships somehow.
In mid-October, carriers notified agricultural exporters they would not accept their orders and instead prioritize empties. Other export products also have been impacted.
“This data and the impact on our economy is potentially very troubling, but unfortunately not altogether surprising,” says Carl Bentzel, commissioner of the Federal Maritime Commission (FMC). “These numbers track pretty consistently with the complaints that we have been receiving at the FMC for the last four or five months.”
More than 300,000 containers were rejected, according to some estimates. Has anything been done during the past five months?
Yuan Talks, Containers Walk
Many trade and supply chain experts offer ways to mitigate this crisis—use air, start a tender management program or use a partner that has one and gives you access, get better visibility, book space based on projections before your transportation management system gets the data. Some large forwarders are chartering small container ships. Here’s a good one—pay the premium or you will be priced out of the market.
But all that, while true, is just icing on a rotten cake and will not have a material impact on this long-term problem. Oh, and blaming the shipping lines for the rejected shipments, as many do—also true—is like blaming the messenger.
The bigger picture points elsewhere. China is obviously cornering the market to flood global zones with product, even forgoing Lunar New Year celebrations in some areas to keep the exports flowing. As the U.S. economy opens up, demand for Chinese goods will continue to grow. That means that this blunt force trade policy of using containers to suppress imports and boost Chinese exports will likely worsen.
Bentzel is right. This trend is not surprising, troubling, and will have an impact on the U.S. economy. But it goes further than that.
Hmm, I wonder: Will this policy impact reshoring plans? It might be a little tough to ship product from the United States if China controls container access. It must be a coincidence, but if you keep your plants in China at least you’ll have access to global markets, right?
Will the current U.S. administration take action to protect U.S. export enterprises? Surprise us.