Outside of writing commentary for the California Political News and Views, our columnist
Rich Eber has worked as a bonded international freight forwarder most of his
professional life. Rich’s dad Allan headed the Australian Freight Conference in the 1970’s.
The Bureau monitored ocean rates “Down Under.”
With such a strong background perhaps the powers that be in Washington D.C. might consider
appointing Mr. Eber to be a member of the reinvigorated Federal Maritime Commission. Were
this done practical considerations of moving freight would come before worrying about climate
change and diversity.
Why do we have inflation? Government policy limiting transportation of goods into the U.S. We pay for the politicians t raise our costs.
Reducing transportation paralysis by Richard Eber
Richard Eber, Exclusive to the California Political News and Views, 6/23/22
With the Congress of the United States in a virtual state of gridlock for the last decade, it is a miracle any bill of substance can ever be passed. The impossible became reality with the bi-partisan Ocean Shipping Reform Act being signed into law last week.
New power has been given to the previously toothless Federal Maritime Commission (FMC) to deal with anti-competitive-price gauging policies of international ocean carriers led by Maersk Line, Mediterranean Shipping (MSC), Hapag-Lloyd, CMA-CGM, and Cosco.
What these carriers, who control more than two thirds all import and exports into the United States have done has put their profits ahead of serving the markets they are operating in. Examples include:
- Leaving low profit export agricultural products behind on the West Coast choosing instead to send empty containers to China that have garnered an average of over $11,000 a 40 foot box with lucrative imports from China.
- Charged shipper ridiculous demurrage charges several times more expensive than actual expenses. Often time’s delays at the port were responsible for imposing these added fees which have become a profit center for steamship lines.
- Unfair rate setting practices that have placed small exporters and traders at a major disadvantage competing with the Walmart, Home Depot, auto manufacturers, etc. Gone is the Freight Conference system that existed prior to deregulation.
Based on past history, it remains to be seen if the new powers granted the FMC will be effectively carried out. Often this organization has been headed by non-qualified appointees and political hacks. They have been slow to take decisive action to work in the interests of those they serve.
With that said the Ocean Reform Shipping Act is a good place to start. In addition to this legislation, there are several other things to be done to ease a tittering transportation distribution system that has hurt consumers and business. The fact hundreds of companies urged Congress to pass this bill is indicative of how important they felt it was to change to status quo of the shipping industry.
In addition to the newly passed bill, there are several other steps that should be taken to deal with the failed transportation system in the USA. This includes:
Fire Mayor Pete from his present post of Secretary of Transportation. This man has no background in the agency he is heading to deal with everything from almonds to baby formula. His appointment by President Biden to the cabinet can be charitably classified as a product of the “spoils system” Being gay, a Democratic Presidential nominee, and later endorsing Biden hardly qualifies him to run an important Federal agency.
Eliminate Federal and State taxes for the sale of diesel fuel for the next year. Doing so will ease inflation as the cost for truckers to operate their rigs would be passed down to consumers at all levels in both international and domestic trades. If this is too complicated, a rebate system can be enacted so those who use diesel for commercial purposes can be compensated. Such a system is also a good way to combat inflation.
Repeal parts of the Jones Act except for domestic trades to Alaska and Hawaii. This legislation passed in 1920 was intended for the promotion and maintenance of the American merchant marine. Among other purposes, the law regulates maritime commerce in U.S. waters to be manned by American crews and equipment. Knowing this, unions have used the Jones Act to exploit consumers resulting in making the American Flag virtually nonexistent in foreign trades. This law is outmoded, out of date, and needs reform. With labor unions involved, it is doubtful Congress will have the courage to intervene.
Get more equipment in circulation: Since the Covid-19 pandemic began in 2020, the production of needed ocean containers has slowed to a standstill in China. There is a severe shortage of 20 and 40 footers used in ocean transport. Indicative is that leasing companies who generally turn in and sell equipment after it has been used for 7 or 8 years, now are holding on to these boxes until they become useless rust buckets. As a result the domestic market for used containers has more than doubled in the last couple years. What needs to be done is pressure China to produce more equipment and manufacture elsewhere including in the United States.
Federal government taking over regulation and distribution at ports. This especially applies to California where Gavin Newsom and his Progressive environmentalist and union cohorts have crippled trucking in Southern California and Oakland. Their pollution reducing regulations have been successful on one level; but have put hundreds of owner operator truckers out of business as well. These same drivers have also been victim of Sacramento trying to change them from being independent businesses (SB-4) to encourage union membership. Perhaps it is time for the Federal government to assert its power to regulate interstate commerce at California ports.
Consider breaking up the monopolies of the Union Pacific (UP) and Burlington Northern (BN) Railroads who control all rail traffic coming from the West Coast. Since rail mergers resulted in these oligopolies a quarter century ago, they have lacked incentive to increase their stack train tonnage to the Midwest, Gulf, and East Coast. Much more investment in track and equipment is needed to meet the future transportation needs in the USA. Increasing competition between railroads is good idea whose time has come.
Improving the efficiency of Port operations: Trying to get the International Longshoreman’s Warehouseman’s Union (ILWU) to streamline their work rules is on par with enduring a root canal procedure. Going back to the early days when Harry Bridges was in charge, the ILWU has resisted change with both automation and operation of the piers. As a powerful union, neither Republicans nor Democrats want to get in a confrontation with them. Even when crippling dock strikes occur, American President’s have been reluctant to use the Taft-Hartley law to get them back to work. It is commonly known when the ILWU is unhappy; slowdowns become a way of life. Everyone suffers.
