AAFA Urges Biden to Act on Shipping Crisis, Provide Relief

Advertisement

AAFA sent a letter applauding President Biden for shining a spotlight on the shipping crisis and taking long-term action to prevent the next shipping crisis. However, the letter notes that the shipping crisis is not over and is, in fact, getting worse. AAFA urged President Biden to take more action now, involving ALL stakeholders and providing real and immediate solutions, to bring today’s crisis under control AND provide immediate relief to businesses as costs, and inflation, spiral out of control.

The letter is below-

Dear Mr. President:

On behalf of the American Apparel & Footwear Association (AAFA), I am writing to urge you to take more action now to end, and provide immediate relief from, the ongoing shipping crisis that is not only hurting our industry, but crippling the entire American economy.

Representing more than 1,000 world famous name brands, AAFA is the trusted public policy and political voice of the apparel and footwear industry, its management and shareholders, its three million U.S. workers, and its contribution of more than $350 billion in annual U.S. retail sales.

We appreciate the leadership you and your administration have demonstrated over the last few months to tackle this crisis. Thanks to your efforts, a bright light is now shining on this issue, forcing key stakeholders to take action in an attempt to end the crisis. We also applaud your support for key legislation in Congress and long-term investments in infrastructure and initiatives to combat the endemic trucker shortage, all of which will pay dividends in the medium and long term to help prevent the next shipping crisis.

But our members, the companies that provide everyday essentials to the American public, need you to do more to end the current crisis now. We need aggressive enforcement, continued leadership to bring the full gamut of stakeholders to the table and, just as critical, immediate relief to businesses that are still struggling under epic freight costs and punitive fees, both of which are fueling inflationary pressures.

Why? The shipping crisis remains dire and is actually getting worse. Shipping rates, after a brief decline, are on the rise again, hitting new records. And even when our members do get their cargo on ships, the line to get those ships into port keeps getting longer. For example, on January 5, according the The Maritime Exchange, 167 ships were queued up in a line stretching hundreds of miles to enter the Ports of LA/Long Beach, with wait times averaging 28.2 days at the Port of Long Beach from anchor to port.

And then it takes too long to get that merchandise. The Port of LA is reporting a record average 11.5 days to unload ships once at berth. And, despite reports of import cargo being cleared off docks, our members still can’t access their import containers, or return empty containers, yet are still being charged demurrage and detention fees for a situation that is completely out of their control. For example, one member reported that two containers have been stuck in a terminal since October 27, over two months, because the containers are buried in stacks and the terminal has not offered our member any way to access the containers. Yet, our member is still paying unfair daily demurrage fees on those containers. The situation has gotten so bad that the Federal Maritime Commission (FMC) on December 30 finally launched an investigation into one carrier, Wan Hai, citing dozens of instances where Wan Hai charged detention fees while providing shippers no way to return empty containers.

inflation rates not seen in decades, impacting every hardworking American family.

The response to date has not worked. The ports have threatened fees, fees on long-standing import containers sitting on docks and now fees on long-standing empty containers on docks. While the ports have not yet imposed the fees, many terminals, including 5 of 6 terminals at the Port of Long Beach, and many other terminals throughout the country, are imposing, or intend to impose “temporary storage charges” on carriers. Carriers pass these charges directly on to our members, the shippers. Other terminals/carriers have started charging fees for missed appointments, even though those same terminals/carriers have not provided any way to access import containers or have restricted returns of empty containers. These fees are initially charged to or ultimately passed on to our members, saddling them with even more costs even though they have no ability to rectify the situation leading to the imposition of these fees, costs that our members will, at some point, likely need to be passed to the American consumer.

As noted above, these fees have had no impact because they were implemented with only some of the players in the room. New actions must include ALL stakeholders – not only ports and carriers, but also terminal operators, truckers, port workers, chassis providers, and, of course, us, the shippers. And we must recognize that we can’t fee our way out of the crisis but that all parties must work together to develop multiple, connected, real, and practicable solutions that can be implemented today.

Your leadership in bringing all parties to the table and finding solutions has never been more important as the July 1 expiration of the current West Coast port labor contract looms over the current crisis. Even in the best of times, port labor contract negotiations have led to employer lockouts, worker strikes, and worker slowdowns, all of which have wreaked havoc on shipping and supply chains. We need your leadership to ensure that both sides come to the table now to negotiate and reach agreement well before the July 1 deadline.

And we need immediate relief NOW! We are already witnessing how the unsustainable cost spiral experienced by our industry, and businesses across all walks of life, is translating into an unsustainable inflationary spiral that hurts every single American and America’s economic recovery.

That is why your Administration can, and should, provide immediate relief by removing temporary punitive tariff costs, such as the U.S. government’s punitive Section 301 tariffs on China our industry, and every facet of the U.S. economy, must still pay. We also urge you to press Congress to quickly and retroactively renew the Generalized System of Preferences (GSP) program and the Miscellaneous Tariff Bill (MTB), whose expiration over a year ago has imposed countless billions of dollars of additional unnecessary costs on our industry and the U.S. economy.

Your administration could even temporarily defer normal tariff payments, which combined with ending the Section 301 tariffs and renewing GSP/MTB, will provide a cash infusion to American businesses to enable them to keep workers, hire new workers, and reign in rising prices.

We need you to take action to end the shipping crisis, and provide immediate relief, now. Our industry, and our economy, cannot afford for you to wait any longer.

Advertisement