U.S. Sen. Amy Klobuchar, D-Minn., met with agricultural leaders at Northland Community and Technical College in East Grand Forks on Tuesday, June 28, to talk about how the recently-signed Ocean Shipping Reform Act will benefit agricultural producers in northwestern Minnesota. The law, signed by President Joe Biden on June 16, aims to ease supply chain issues and shipping backlogs.
The supply chain issues facing the United States have many contributing factors, including the COVID-19 pandemic, the war in Ukraine and workforce issues, said Klobuchar, but on top of those issues, the trade practices of foreign-based shipping conglomerates have added to increased prices for consumers and American exporters.
“They have been charging exorbitantly high rates, nothing like they’ve charged before, and they also have not been exporting some of our stuff,” said Klobuchar.
The bipartisan-backed law, introduced in the Senate by Klobuchar and Sen. John Thune, R-S.D., and the House by Reps. Dusty Johnson, R-S.D., and John Garamendi, D-Calif., gives the Federal Maritime Commission, the agency that regulates the U.S. international ocean transportation system, more oversight over international ocean carriers. The bill was approved unanimously in the Senate and by a 369-42 vote in the House of Representatives.
Klobuchar said her work on the act started when she heard that Minnesota farmers voiced their frustration with the high cost, and low availability, of shipping containers.
“The average price of shipping containers has increased by at least four times, and at the same time, the ocean carriers, almost all, of which I’ve noted, are foreign owned, have reported record profits — $190 billion in 2021 alone, seven times what they were making in the past,” said Klobuchar.
Along with charging more, Klobuchar said, carriers will turn away American goods and return to foreign countries with empty containers. Bruce Gjovig, vice president of North Dakota and Northwest Minnesota Export Council, said this practice has caused a shipping container crisis for exporters in rural areas, including farmers, food processors and manufacturers.
In 2021, he said, 12 million containers, or 59% of total containers, were sent back to Asia empty.
“So our number one export was air,” said Gjovig.
He says Asian countries, mainly China, pay for the shipping containers to return empty so they can be filled with imports and sent back to the United States faster.
“This really impacted our trade imbalance as well. We couldn’t export, so our exports are down, where their imports are up,” he said.
Eric Samuelson, president of the Northarvest Bean Growers Association, said the shipping container shortages came at a time when dry bean growers have been experiencing more of a demand.
“Last spring, the U.K. tariff was done away with, so that was a big part of our market that we got back,” he said. “With that being disbanded, we need the containers in order to move our product over there.”
He says the new law will provide a more steady supply of shipping containers to Midwest farmers.
With the new law, the FMC will be able to investigate the business practices of ocean carriers, prohibit carriers from declining opportunities for U.S. exports unreasonably and require proof that any late fees — demurrage and detention charges in maritime terms — comply with federal regulations.
Klobuchar says the nearly unanimous support for the act gives it even more power against companies charging American businesses unfairly.
“That’s scary if you’re the ones that are gouging because that means if you continue this behavior, we could actually do more,” she said. “We could do more when it comes to being more aggressive about going after them and they know that.”