An investigation has now been launched into a shipping container shortage that is causing a bind for some American exporters and farmers.
The shortage is not new, but it has now reached critical levels causing shipping costs to soar, 300 percent in some cases. One exporter says that it threatens the world food supply.
A new investigative report from CNBC found that international shipping carriers rejected nearly 180,000 export containers at four major U.S. ports during October and November, adding up to a loss of $630 million dollars, but the pattern started as early as June, with the loss at those ports at more than a billion dollars.
Bob Sinner, President of SB&B Foods, a major American soybean exporter, estimates 30-40 percent of his company’s total exports have either been delayed or canceled, forcing the company to use air freight to Asia instead.
However, it is not U.S. competition causing the problem. Redwood Logistics CEO, Mark Yeager told CNBC he estimates three in four containers from the U.S. are going back to China empty to be refilled with more profitable Chinese exports.
The port of Los Angeles confirmed the situation saying, “We need a cohesive U.S. export policy that addresses a range of issues, including container accessibility for our agricultural markets throughout the country.”
U.S. ag exports for 2020 were larger than 2019 because of the Phase One Trade Agreement with China, but an export is not official until it is transported and processed in the country of destination. The investigation found the increase in ag exports pales in comparison to the increased ration of empty export containers.
Some carriers say that the issue is unintentional pointing instead to the pandemic.
Even still the Federal Maritime Commission has launched an investigation to determine if carriers have violated the Shipping Act, which makes it illegal for them to “unreasonably refuse” cargo.
In the meantime, Sinner says that it goes beyond trade. It is about the global food supply.
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