Who is Over the Current State of Shipping?

When I fired up my computer earlier this week, the top tweet was how there were 44, yes 44, container ships sitting in the water off the Ports of Los Angeles and Long Beach. This number is the highest since the pandemic began!

The ever-growing chaos this shipping mess has left for our members, and ultimately the American consumer continues to astound me. And yet, the People’s Republic of World Shipping, aka the World Shipping Council (WSC), would have you think that there is nothing to see here — just conducting normal, fair market practices within the supply chain. Well, that is a bunch of garbage. The major ocean carriers have demonstrated why monopolies should not exist in this economy. 

Shipping rates are skyrocketing; new fees are added every day; and even if you pay the “guaranteed” rate, you will find the guarantee simply doesn’t exist – contracts don’t mean anything to these exploiters — and the list goes on. On September 1, NACD sent a letter to the head of the World Shipping Council, John Butler, to highlight what is transpiring all around our industry as a direct result of the greed displayed by the ocean carriers. The major points in the letter include:

• Failure to accept and move dangerous goods;
• Cost increases, from the beginning of the covid pandemic, of upwards of 1000%;
• Contracted rates range between $2,000 and $4,000 for a container. Now NACD members are paying $10,000 to $25,000 per container for spot shipments that are often not guaranteed or honored;
• Premium pricing charged on all shipments, well beyond contracted agreements;
• Pre-paying elevated prices to guarantee a space on a carrier ship,  and unexpectedly the WSC carriers raise the price further before the container ships and/or they delay the shipment to a future departure date or even cancel the shipment; and
• Delays increased anywhere from two weeks to three-plus months (according to our second shipping survey last June).

And we aren’t the only ones in the chemical industry frustrated by this shipping nightmare. The Council of Chemical Association Executives recently sent a letter calling for a joint hearing by the Federal Maritime Commission (FMC) and the Surface Transportation Board to discuss escalating chemical supply chain disruptions; don’t think for a second that the railroads aren’t involved with this mess too. Ocean carriers are following a dark precedent set by a couple of the Class One operators when it comes to price gouging, delays, and not taking responsibility for anything altogether.    

Capitol Hill is finally getting off the sidelines to address these issues by recently introducing the Ocean Shipping Reform Act of 2021. The measure is not the total solution to address the price gouging and delays of the shipping industry, but it sure is a positive step in the right direction.

As an association, we continue to make every effort to highlight the enormous constraints the supply chain is currently undergoing and how things are not going to get better any time soon. We need the WSC and the FMC to step up and demand corrections to this situation. This week, the New York Times interviewed myself, Megan Gluth-Bohan from TRInternational, Inc., and John Logue from Royale Group to drive home these points.   

So, what can you do to help?  A number of things.

1. You can take five minutes to encourage your Member of the U.S. House of Representatives to co-sponsor H.R. 4996, the Ocean Shipping Reform Act of 2021.  
2. Last week, the association issued a notice urging members to share their shipping difficulties directly with the Federal Maritime Commission (FMC). The more examples and data we can share with the FMC, the more powerful the industry’s message becomes. NACD has prepared a template for members to use to communicate their story to the FMC. This template offers a general structure and guidelines for members to follow when detailing their experiences.
3. Join our NACD Shipping Task Force! Let me know that you are interested by sending an email to
   ebyer@acd-chem.com

The shipping supply chain is critical to our members’ businesses and the broader chemical industry. It must be stabilized before it’s too late.