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Numerous transport companies coalesce against shipping reform bill

Numerous transport companies coalesce against shipping reform bill
US ports have been dealing with high levels of congestion this year

As many as 27 transport companies, including notable ports and terminal operators, are calling for legislative decision makers to reject the proposed Ocean Shipping Reform Act of 2021, claiming it will have detrimental consequences to the entire supply chain.

In August, Rep John Garamendi (D-CA) and Dusty Johnson, (R-S.D.) introduced the bill at the House of Representatives aiming to address concerns about terminal congestion by reducing beneficial cargo owners’ (BCOs) responsibility to collect cargo from marine terminals.

The organisations which are urging legislators to reject the bill include APM Terminals, Global Container Terminals (GCT) USA, Long Beach Container Terminal, Luis A. Ayala Colon Sucrs., Inc., Port Houston, Ports America, SSA Marine and the World Shipping Council.

According to them, the legislation would undermine financial incentives for BCOs to move their cargo from terminals in a timely manner.

They argue that importers would be required to pay, which as a result, would encourage these organisations to store containers on the terminal, further clogging ports and impacting the ability to keep freight moving.

In their opinion, without these charges incentivising retailers and importers to pick up cargo, the supply chain would suffer additional setbacks from delays in inbound shipments and exports.

Currently, before one container can come into a space, another has to be removed. When containers are unloaded from ships, they are allowed a period of “free time” on the terminal.

However, when containers are not picked up within the agreed-upon time, the BCOs are charged charges demurrage and detention fees, which the 27 companies believe are critical incentives for BCOs to pick up cargo.

Ed DeNike, president of SSA Containers, said: “The legislation announced by Congress is concerning and does not address the multifaceted nature of congestion as a complete supply chain issue.

“If enacted, the legislation would provide a temporary financial relief to importers and BCOs, but impose tariffs for ocean carriers, worsen operating conditions for marine terminal operators and other transportation stakeholders, and hinder the capacity to solve the true supply-demand problem at hand.”

Increased consumer demands, shortages of labor and equipment, and complex global trade and travel constraints resulting from the pandemic have caused record-breaking container volumes and “dwell times” at ports – the time a container sits on the terminal.

For example, the local delivery dwell time for containers on the West Coast has doubled in the past year; the on-dock rail dwell times have quadrupled, now averaging eleven days, and the on-terminal container count has increased by 43% resulting in congestion and slower velocity.

Many terminals on the West Coast have been at 95% capacity in 2021, although terminals are normally considered to be full when filled to 80% of capacity.

Further, warehouse vacancy rates are at an all-time low of 1.2%, with many at capacity, prolonging container and truck chassis dwell time outside the terminal.

In the opinion of the 27 transport bodies, extending working hours to increase capacity at terminals is ill-advised because for a 24/7 operation model to be effective, other transport groups including truckers and warehouse operators, would also need to commit to working those hours.

John W. Butler, president and CEO of WSC, said: “[The bill] will not solve supply chain congestion because it focuses solely on marine terminal operators and ocean carriers, but the congestion problems are supply-chain wide.

“Carriers have deployed every available ship and container, but our ships are waiting to get into port and our containers are sitting at our customers’ facilities waiting to be unloaded because of landside bottlenecks.”