As Christmas approaches many Americans are concerned about the long backups at U.S. ports, particularly on the West coast, which are causing delays in the American supply chain and could make many gifts late for the holiday.
But many American farmers are dealing with essentially the opposite of that supply chain crisis – they're having a hard time getting their goods out of the country to foreign buyers.
"It's the destruction of millions of dollars in value," Rep. Dusty Johnson, R-S.D., told FOX Business Wednesday. He was the chief sponsor of the Ocean Shipping Reform Act that passed the House Wednesday by a 364-60 vote.
Among the provisions in the bill, Johnson said the most important has to do with Asian ocean carriers that "unfairly discriminate against American cargo." He said that they will offload foreign goods in U.S. ports then simply sprint back to Asia so they can bring more goods back to the U.S., rather than taking the time to fill up with American goods to sell abroad.
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"You look at Valley Queen, they're a cheese manufacturer in South Dakota. They had 2 million pounds of already sold lactose that has been sitting in a warehouse just waiting for a shipment," Johnson said. "And a recent container load of lactose that they had sold... sat on the dock for 75 days."
"It started to spoil. And just on that one container load that was a $25,000 loss. And we have this happening throughout the American manufacturing and agricultural supply chain," he added.
Johnson also detailed the story of an Iowa pork producer who told Congress it is losing out on massive sums of money because its product is forced to sit on the dock for a long time and eventually has to be frozen.
"Asia loves chilled pork. They love never-frozen pork. And we ship a tremendous amount of pork over there. And when it has to sit on the dock for days at some point to keep it from spoiling, we have to freeze it. And that eliminates millions of dollars worth of premium that the Asians are willing to pay," Johnson said.
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The problem exists broadly across the U.S. agriculture industry, particularly in states thar rely on West Coast ports to ship their goods. The president of a California agricultural association told the Associated Press that 80% of shipments abroad were canceled in October. And the contracts that U.S. ag producers are forced to sign tend to encourage that type of behavior from shipping companies, Johnson said.
"Right now we've got five major ocean carriers, they're all foreign flagged, and frankly their interests are not very well aligned with the interests of this country," Johnson said.
"Unfortunately because it's an oligopoly.... you've got to take it or leave it if you're an American ag shipper," he added. "The terms often say that liquidated damages for you canceling a container is $100. Well there can be $100,000 of goods in each container."
Johnson said that the Ocean Shipping Reform Act would push back on this behavior by setting up "some basic rules of the road."
"If you're going to use this shared infrastructure, you're going to play fair, and you're not going to have unprecedented levels of rejection of American cargo – which is what we're seeing actual rejection a refusal to take this cargo," he said.
Johnson said that the bill is not protectionism but is actually "the opposite," as it's meant to encourage trade with Asia. It addresses other elements of the supply chain crisis at U.S. ports as well – including the long lines of ships trying to get goods into the U.S.
"Overall, the bill really creates an environment where efficiency is rewarded for these ocean carriers, and so you have provisions in the bill whereby data exchanges can be set up and are really – they're incentivized to set them up," Johnson said. "That is going to make the whole system operate a lot better."
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That efficiency could mean more than just that next year's Christmas gifts arrive on time. Many sectors of the U.S. economy are affected by the backlog of foreign goods, including farming.
"Farmers in my district are already looking at shortages on farm equipment and chemicals along with skyrocketing costs, which will impact what they are able to plant next year," Illinois congressional candidate Esther Joy King, a Republican, told FOX Business.
The Ocean Shipping Reform Act will now go to the Senate, where it will make its way to President Biden's desk if passed. The bill would be the biggest update to shipping regulations in 30 years if signed by the president, Johnson said.
The Associated Press contributed to this report.
