Maritime Affairs Program (MAP) Handbill Spotlight

Similar to other parts of the American supply chain, maritime shipping from Asia to the U.S. has been deeply impacted by the pandemic. Cargo shipments are stuck at major ports in California, New York, and New Jersey, where a shocking long queue of freights are floating on the ocean waiting for the next dock to become available. Meanwhile, many carriers are shipping empty carriers back to Asia due to the high cost of long waits in U.S. ports and the cost to reposition containers for inland U.S. exporters; especially agricultural exporters. Meanwhile, import prices rose due to the rising shipping fee caused by high late fees charged at ports. The issue has, therefore, evolved beyond a matter of supply chain resilience, but also a matter of trade and civil economy.

This great supply chain disruption rang the alarm in Washington as Congress worked together to address the issue by passing the bipartisan Ocean Shipping Reform Act, which was signed by President Joe Biden on June 16, 2022. This new law aims to reduce costs for American consumers and ensure that agricultural exporters are less impacted by the supply chain disruption. More specifically, it will empower the Federal Maritime Commission to investigate ocean supply chain issues during the pandemic and to require carriers to provide detailed quarterly inventory.

Keep In Mind

While it appears that actions so far have been focusing on addressing the challenges and problems emerged over the pandemic, the Biden administration’s and the U.S. Congress’ increasing concern over maritime shipping security could have significant implications for the U.S. pursuit for supply chain resilience in general. The push for securing maritime shipping could also have a great impact on the on-going U.S.-China trade and supply chain decoupling.

The maritime shipping crisis over the pandemic has again shown American dependence on the international shipping industry. While it may not be a bad thing during normal time, it could be seen as somewhat problematic by Washington given that China has a dominant presence in the international shipping industry. China is both the world’s largest shipbuilder and container maker and Chinese state-owned China Ocean Shipping (Group) Company (COSCO) is ranked fourth among the world’s 10 largest shipping companies. President Biden has already criticized foreign shipping lines for stoking inflation and suggested that the FMC should crack down on these companies. Moreover, it is reported that China is the primary destination for empty containers shipping back to Asia that reject American agricultural exports.

As the U.S. seeks more self-reliance in maritime shipping, its response to China’s heavily subsidized shipping industry and Beijing’s increasingly dominant role in maritime shipping could be an indicator of how far Washington is willing to go to pursue supply chain security.