A top maritime official has started an informal investigation into whether China is using its market power to monopolize containers and other equipment crucial to international supply chains to pump up rates paid by American exporters.
Carl Bentzel, a U.S. Federal Maritime Commissioner (FMC), told attendees at a virtual business meeting hosted by the Intermodal Association of North America that he is looking into the availability of containers, intermodal chassis and railroad equipment, and whether the U.S. has become overly dependent on such equipment owned and managed by China.
“I am concerned that this equipment is controlled by a state-owned enterprise and that we’re completely reliant, and I have questions about whether or not there’s been market manipulation of what is potentially a monopoly,” Bentzel said at the meeting on Wednesday. “We really need to take a look at our reliance on that segment of the industry, and evaluate how important it is to our nation.”
Bentzel made public months ago his concerns about shortages of equipment used to support cargo moving in the U.S. trans-Pacific trade in the wake of volume surges at the country’s major container ports, particularly the Los Angeles-Long Beach complex.
“I would note with concern that most intermodal chassis and marine containers are manufactured in China,” Bentzel stated in November. “I find it hard to believe with the full restoration of Chinese manufacturing that has come roaring back, creating volume surges, that the marine equipment segment has lagged so far behind.”
The problem is not likely to be resolved soon, based on the recent outlook from equipment leasing companies. These lessors — which order containers from a small number of Chinese manufacturers and then lease them to shipping lines — see profitable market conditions likely into 2022. Tighter box capacity means higher rates shippers must pay liners to move their cargo.
That means transit times from Asia are likely to remain slower as well. “We’re understanding from the ocean shipping lines that they’re waiting two weeks in China to get cargo containers, and we’re seeing delays of up to two weeks on intermodal movements going through railroad terminals as [U.S. railroads] are also grappling with challenges providing the equipment that is necessary to move,” Bentzel said.
He was told by an “unnamed container shipping line” that the 33-day benchmark for transit from Beijing to Chicago has doubled to 65 days. “The equipment that we need is moving slower,” Bentzel said, “which all contributes to a huge challenge moving cargo.”
The operational challenges have raised legal issues, and the FMC is continuing to assess information gathered through its ongoing fact-finding investigation into shipping policies and practices by major container lines operating at the country’s largest container ports.
The FMC is also looking into allegations that U.S. exporters are being refused service by carriers that can generate more revenue by flipping empty containers immediately back to China to be refilled with U.S. imports instead of making them available at inland loading points for U.S. exporters.
“I anticipate that we’re moving closer towards enforcement proceedings or policy suggestions to help better serve the shipping public,” Bentzel said.