Containers* arriving at Port of Los Angeles:
4.72 million: January-October 2021
3.48 million: January-October 2020
3.97 million: January-October 2019
* Counted in TEUs (“twenty-foot equivalent units”, for the standard 20’ x 8’ x 8.5’ shipping container)
D.C.’s taxi cabs and their dispatchers obey a public-interest rule: If you wish to serve the lucrative routes — say, Dulles-to-Mayflower Hotel and back — you must also agree to pick up fares from the neighborhoods. Representatives John Garamendi (D-Calif.) and Dusty Johnson (R-S.D.), in their proposed Ocean Shipping Reform Act, pose a question: Shouldn’t the world’s container ships live by a similar rule, requiring them to carry American export cargoes as well as inbound containers?
Statistics put out monthly by American container ports suggest why they ask this question. From January through October, the Port of Los Angeles — the busiest U.S. container port — took in 4.72 million containers (again in TEUs). This is a bigger total than all but one of LA’s full-year incoming container counts, and based on a daily average of about 15,500 arriving containers, the 4.87 million-TEU record set in 2018 probably fell two weeks ago. Statistics are much the same at the second-busiest port — Long Beach, ten minutes’ drive east on the Seaside Freeway — which likely broke its own annual record last weekend. Meanwhile, truckers and warehouse workers have been leaving their jobs all year for better options: 1.4 million workers in the Bureau of Labor Statistics’ transport/warehousing/utility sector have quit through September, easily breaking the 1.1 million full-year record set in 2002. So with record arrivals on one hand and bottlenecks on the other, the ports have clogged up. The resulting worries about Christmas inventories and intra-U.S. supply bottlenecks are intense enough to worry even the President of the United States.
A less publicized consequence of the incoming-container surge is a perverse incentive for shipping companies: they’re tempted to ignore U.S. exporters. Fees to ferry a container from Asia to the West Coast, normally between $2,000 and $3,000, have run at $15,000 for much of this year and at times hit $20,000. With import income so high, a ship can often earn more money by turning around empty to refill in Asia than by loading a waiting U.S. export cargo for $3,000 or so. September’s Port of Los Angeles container report provides a vivid illustration: it counted 434,294 outbound containers, of which 358,351 traveled empty, and only 75,713 carrying U.S. cargo — the Port’s lowest count of full export containers since the autumn of 2002.
This hits farm exporters who use containers especially hard, as producers of meats, dairy, wines, tree nuts, and specialty crops often require quick pickup of perishable goods. As of mid-year they reported losing $1.5 billion in exports. To put this in perspective, calculations by the Department of Agriculture’s Economic Research Service done for 2019 suggest that each $1.5 billion in agricultural exports meant about $1.7 billion in economic activity for the U.S., including about 12,000 jobs and $500 million in farm income.
Hence, the bill Reps. Garamendi and Johnson propose. Returning to the taxicab analogy, a D.C. taxi company fielding a request for dispatch must accept the fare (unless the customer is belligerent, intoxicated, etc.) or face a $250 civil penalty. Maritime shipping operates on an obviously different scale — a single medium-sized container ship could carry all 7,151 D.C. cabs if it wanted to**, and there are 6,293 such ships on the water — but also has some similarities. Like taxicabs, the mighty vessels run by Maersk, Evergreen, COSCO, MSC et al. are “common carriers” given a right to serve U.S. ports. Under the bill, this right would come with a complementary responsibility to serve American exporters and could not “unreasonably decline export cargo bookings if such cargo can be loaded safety and timely and carried on a vessel scheduled for such cargo’s immediate destination” without becoming liable to penalties by the Federal Maritime Commission.
** Yes, we know, not a likely real-world scenario. Cars aren’t easy to squish into containers (though it can be done if necessary), and usually travel on roll-on/roll-off ships. Just meant as a visual.
Legislation
From Reps. Garamendi and Johnson, read the Ocean Shipping Reform Act.
A supportive White House post can be read here.
The Federal Maritime Commission, tasked with regulating ocean carriers and (should the Garamendi/Johnson bill pass) enforcing new rules.
Agriculture and the export economy
Farm Bureau economist Daniel Munch on the West Coast port challenges and their impact on American agriculture, read the piece here.
The New York Times’ Ana Swanson (subs. req.) has the view from the California dairy farm, read the piece here.
And the USDA’s most recent investigation of ag exports and their economic impact at home can be read here.
Ports and ships
Container statistics from the Port of Los Angeles can be found here.
UNCTAD’s 2021 Review of Maritime Transport, with examinations of the impact of COVID-19 on 2020 shipping and cargo, the 2021 rebound, and some glum detail on U.S. ports. The three busiest U.S. container ports – Los Angeles, Long Beach, and New York – handle 25 million containers per year, about as many as China’s 4th-busiest port (Shenzhen) does all by itself. The world’s top two — Shanghai and Singapore — manage 44 million TEU and 37 million TEU, respectively.
Help on the way — The White House summarizes the maritime investment sections of the bipartisan Infrastructure Investment & Jobs Act.
And last …
What are container ships really like? Horatio Clare’s Down to the Sea in Ships (2015) recounts a trip on the Gerd Maersk, a 6,600-TEU ship built in 2006, on a UK-through-Suez-to-Malaysia-
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
