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RELEASE: Gottheimer Announces Federal Action to Address Supply Chain Issues, Ocean Carrier Delays, Cost Increases at Port in Newark
Supply Chain Issues Impacting North Jersey Small Businesses, Families — with the Holidays Around the Corner | Outlining Solutions for Increased Delays and Shipping Costs
Newark, NJ, October 12, 2021
Above: Gottheimer at the Port in Newark today.
NEWARK, NJ — Today, October 12, 2021, U.S. Congressman Josh Gottheimer (NJ-5) announced steps to combat supply chain issues, ocean freight carrier delays, and rising shipping costs hurting North Jersey small businesses, workers, and families, and which will impact the upcoming holiday season.
Gottheimer called for action to combat supply chain issues, including:
Gottheimer was joined today by U.S. Congressman Donald Payne, Jr. (NJ-10); Sam Ruda, the Director for the Port Authority of NY and NJ; President and CEO of SG Companies Matt Feiner; Federal Maritime Commission Chairman Dan Maffei; and stakeholders at the Port in Newark.
While the hardworking men and women of the International Longshoremen’s Association and the Port in Newark are working overtime to mitigate the issue, the major ocean carriers are continuing to raise prices and take advantage of a world that is still recovering from COVID-19.
“We are currently facing a shipping and supply chain crisis. Shipping container costs have increased ten times since the start of COVID, there are major delays, and we are having trouble getting goods to America, from ventilators to shoes to clothing and toys, and the price of nearly everything we import is through the roof,” said Congressman Josh Gottheimer (NJ-5), a member of the House Homeland Security Committee. “These costs are equal to a new major ocean freight carrier-imposed international tax on Jersey’s middle class families. Shipment times between China to the United States are 83 percent longer than in late 2019. I think of all the families who were hit by the awful flash flooding from Hurricane Ida and now need to replace furniture, clothes, or other items that they lost from storm damage. These aren’t just things that people want. They are goods that people need.”
Additionally, supply chain issues, increasing costs, and delays are crippling small businesses, because it is harder for them to absorb price increases on the goods they sell — if they can even get them — all while they are trying to stock up for the upcoming holiday season.
“I think that today’s meeting was a very good start to deal with the issues of unloading cargo at the port,” said Congressman Donald M. Payne, Jr. “We are doing everything we can to minimize these issues as we approach the holiday season. The situation at Newark is not nearly as large as the problems faced on the West Coast and that is due to the great work of Port Authority workers. But I am outraged to hear that the cost to move a shipping container has risen from $1,000 before the pandemic to more than $22,000 today. We will not tolerate any arbitrary price increases that are not directly related to legitimate market forces.”
“Listen to this -- the average cost of shipping a container used to be between $1000-2,000 on the spot market. Now, believe it or not, it’s between $22,000-30,000 — ten times more than it used to be. Supply and demand are real, but the idea that a container should cost 10 times what it did before COVID is absurd,” added Gottheimer. “We need to fix this shipping crisis now – before the holidays because the last thing we need is a giant piece of coal in America’s Christmas stocking.”
“Typically, we would pay 2500 dollars a container to move goods from China to the US and now we are paying 20,000, ” said CEO of SG Companies Matt Feiner. “It’s really difficult on the company — we have survived two world wars and other challenges over the years, but I have to tell you that this has been an incredible challenge for us that impacts our profitability and our ability to take care of our incredible team of people who are helping us weather this storm.”
Congressman Gottheimer also noted that, “Everything from clothing to auto-parts to furniture to building supplies, to COVID-19 masks, to what we buy in Wal-Mart to the local town store, is made elsewhere and depends on the giant ships like the ones at this port to get here. And those goods are all packed in giant shipping containers and sent from ports around the world by one of the five major ocean carriers and by ocean liners that literally control the shipping market, one of them Chinese-owned. There is no apparent real competition, it’s a cornered market with no global transparency into the supply chain, and, I believe there is potential collusion between these major ocean carriers.”
Watch the press conference here.
Gottheimer’s remarks as prepared for delivery:
Thank you to the Port of Newark, the Port Authority, and FAPS for having us here this morning and for working so diligently to address the supply chain issues that are impacting so many.
Thank you to Federal Maritime Commission Chairman Dan Maffei, I want to thank the men and women of the International Longshoremen’s Association for their tireless work here, and Matt Feiner, President & CEO of SG Companies who outlined the depths of the challenges we are facing and the impact it’s having on small businesses and American families. Among so many others, Matt raised this issue with me months ago, and helped focus our work on the shipping and supply chain crisis.
I can’t think of any better way to describe the impact these ocean carrier costs and delays are having on our businesses and hardworking families in New Jersey and across the country. So, we are here today to talk about why this is happening and what we can do to help address this five alarm fire, particularly as we continue to fight COVID-19 and with the upcoming holiday season. The last thing we need is a giant piece of coal in America’s Christmas stocking. We need to fix this shipping crisis now – before the holidays.
But here are some jaw-dropping facts that will give you a sense of the shipping and supply chain crisis – and why we are having trouble getting goods here, from ventilators to shoes to clothing and toys, and why the price of nearly everything we import is through the roof. These costs are equal to a new ocean freight carrier-imposed international tax on Jersey’s middle class families.
In this day and age, in the global economy, we know that so much of what we use in America is manufactured overseas – much of it in China. Everything from clothing to auto-parts to furniture to building supplies, to COVID-19 masks, to what we buy in Wal-Mart to the local town store, is made elsewhere and depends on the giant ships like the ones at this port to get here. And those goods are all packed in giant shipping containers, and sent from ports around the world by one of the five major ocean carriers and by ocean liners that literally control the shipping market, one of them Chinese-owned. There is no apparent real competition, it’s a cornered market with no global transparency into the supply chain, and, as I’ll get into, I believe there is potential collusion between these major ocean carriers.
Since the beginning of the pandemic, ocean carrier costs – what it costs to pack a container -- have skyrocketed rapidly. Listen to this -- the average cost of shipping a container used to be between $1000-2,000 on the spot market. Now, believe it or not, it’s between $22,000-30,000 — ten times more than it used to be. Supply and demand are real, but the idea that a container should cost 10 times what it did before COVID is absurd. And, we are beyond the height of the pandemic now. This is a massive spike in the cost of shipping goods, especially goods coming in from China.
What does this mean for the average local business, whether that’s a hospital, restaurant, shoe manufacturer, or home builder? It means that, given how dependent we are on what comes to us in these containers, the cost they have to charge the average family for nearly everything is way up. What does this mean for families and our local businesses?
It’s crippling small businesses, because it is harder for them to absorb price increases on the goods they sell, if they can even get them. Stores are trying to stock for the upcoming holidays, which — as crazy as it seems — really aren’t that far away.
As Matt just told us about his 125-year-old New Jersey company, which is a major supplier to the likes of Wal-Mart and Target, the cost for a pair of shoes has gone up 20 percent – and the cost for families is up even more than that.
Over the last year, I’ve also heard from another Fifth District business owner, Joe Cohen, who runs a company called Snow Joe that sells items like pressure washers and snow blowers, mainly things that are bulky and need shipping containers. He told me about how crippling these supply chain problems have been on his business. In fact, he had wanted to hire more than 150 more employees, many in Mahwah, NJ, but the increased costs he’s facing have put that hiring on hold.
For consumers, Joe’s best-selling item on Amazon, the Snow Joe electric shovel, normally sells for $19.99. Now, because of shipping costs and the Trump Administration tariffs, that same shovel is up to $29.99. His Sun Joe Electric Pressure Washer used to sell for $199, but, because of container costs and tariffs, the new price is $399. He is dying to lower the price for Christmas; he would sell more. But, the shipping costs just keep going up. This ocean carrrier shipping and supply chain crisis is making goods more expensive for families, with some prices up 150% over their original price. This is the same as a major ocean carrying company-imposed international tax on America’s middle class, hard working families. For constituents who run businesses of all types -- from clothing boutiques, to building supply companies to furniture stores and others, this issue cuts across industries.
With containers hard to come by, it has also exponentially increased the time hospitals are waiting for essential items like ventilators, builders and manufacturers are waiting for parts, and consumers are waiting for their everyday items. Shipment times between China to the United States are 83% longer than in late 2019. I think of all the families who were hit by the awful flash flooding from Hurricane Ida and now need to replace furniture, clothes, or other items that they lost from storm damage. These aren’t just things that people want. They are goods that people need.
On top of that, if something that usually takes days, takes weeks to arrive this holiday season, there are going to be a lot of empty Christmas trees and sad Hanukkah nights, and parents all across America will be writing more IOU cards than ever before.
There is a major backlog on goods and shipping all over the world — we are all in the same boat, so to speak. Just this morning, the IMF downgraded its growth estimates for the United States and other countries by a full percentage point because of “supply disruptions.” This is a global problem.
Now, what are some of the other causes? Are there some staff shortages at some ports here and around the world, including in the United States, China, and European countries — yes, and it was obviously worse during the height of the pandemic. But, it doesn’t explain ten times the cost. Here at the Port of Newark, while they could always use more workers, there are no off-loading issues. Our port leaders and hardworking men and women of the Longshoremen's Association have been working overtime, including late nights and long weekends.
They’re trying to address this problem and do whatever they can to help our small businesses get their goods, and help residents get the products they bought. In fact, there is currently just one ship outside this port waiting to unload, whereas there are more than 70 outside the Port of Los Angeles. It is truly amazing work that the team here at the Newark port is doing to mitigate this issue.
There have also been ground transportation issues and shortages, with US truckers and rail, and there is also a burgeoning energy shortage issue right now in Asia. Many of the ports in China are literally shutting down for a few days at a time because of the energy crisis. There is also a challenge tracking some of the actual containers, because of the antiquated technology in the shipping business.
But, even with some of these other factors, and they are worth mentioning, these are issues major ocean carriers have faced, in one way or another, over the years. Never before have they raised what it costs to ship a container by ten times — and costs are still rising with no relief in sight.
It seems to me like some of our shipping friends are taking advantage of the COVID crisis and trying to make an extra buck on the backs of Jersey small businesses and families.
Now, here’s the rub -- it’s hard to get a straight answer about why this massive spike from any of the five major ocean carriers that control the entire market. They keep claiming supply and demand. Listen, I’m a capitalist. I believe in markets. But economists will tell you that these prices are way beyond the natural tendencies of the marketplace.
Major ocean carriers have control over the prices and the timing, and it is clear that they haven’t done nearly enough to mitigate these issues and lower costs. In many ways, it appears – and I hope I’m wrong – that they are taking advantage of this pandemic to continually raise prices. And, in my opinion, they have shown too little regard, especially for their smaller customers, who need containers available to receive and ship their products.
And, as I said, there are literally five major ocean carriers, including one owned by Chinese businesses, that control the entire global marketplace and have zero transparency in how much supply they have and how they set their prices. Our families and businesses are literally at their whim and we have no idea, day to day, how these prices are set. There is no central computer system using AI to move the prices like in a normal market, like the airlines have, or a commodity like oil or corn. It’s a bunch of folks in a back room doing what they want and apparently taking advantage of a world on its knees due to COVID.
So, how do we solve this problem? How do we eliminate this new shipper-imposed tax on middle class families and American businesses and get the cost of shipping down and more transparency into this process?
Well, first, to start, I have already introduced legislation that addresses the supply chain issues head on. The bipartisan Made in America Emergency Preparedness Act, which was endorsed by the bipartisan Problem Solvers Caucus and introduced earlier this year, helps ensure that we actually start manufacturing more of our own goods here -- so we aren’t so internationally-reliant on things like masks, ventilators, you name it, in the face of future national emergencies. It will lessen our dependence on foreign companies and prevent the predatory price gouging we are seeing today.
Second, I’m calling for immediate hearings in the Transportation and Infrastructure, Ways and Means, and Homeland Security Committees to study and hold immediate hearings on the reasons for the continued, unnatural, unserious spike in global shipping prices and potential collusion in the marketplace. There are five major ocean carriers in the world, and despite entreaties from Congress, the Administration, and the Federal Maritime Commission, container prices keep rising. In fact, the Biden Administration in August appointed John Porcari to serve as Port Envoy to the Biden-Harris Administration’s Supply Chain Disruptions Task Force. Envoy Porcari will work closely with the U.S. Department of Transportation and the National Economic Council to address congestion at U.S. ports.
The bottom line: We need a strong cop on the beat here. None of the five major ocean carriers are American owned, one is owned by the Chinese, and they are controlling the global supply chain right now. From toys to ventilators to PPE, we rely on the international supply chain to supply vital and lifesaving goods. The disruption to our supply chain is a direct threat to our economy and national security, to our ability to handle international crises like pandemics, and we need to be sure that it is not being caused by collusion among non-American companies. We can’t allow anyone to use COVID as an excuse to hurt our families and businesses, and to risk American lives in a pandemic.
Third, I’m calling on the Federal Maritime Commission and all relevant authorities to redouble their oversight efforts to investigate major ocean carriers’ practices and assess if there is any collusion or anti-competitive practices. Strong oversight is invaluable at this moment, and I support the action that Chairman Maffei has already taken with the FMC’s enforcement powers to hold bad actors accountable. There must be more competition among major ocean carriers to ensure prices are not being unfairly manipulated, we must do more to make sure that all major ocean carriers are truly competing for importers’ and exporters’ business.
Relatedly, and I’d ask the Maritime Commission to act here, as well, there must be more transparency in the global shipping process. As I said, it’s a black box and no one knows what’s available in the market across companies. Unlike in our commodity markets, where the prices for corn or soybeans are clear and transparent, the pricing and availability of containers is far too arcane and opaque. We need to require that major ocean carriers all allow their offerings to be modernized, so that they can be tracked and purchased in a transparent marketplace where modern data practices, including AI and big data, allow for customers to see the best prices and availability across multiple companies. Also, businesses shouldn’t wake up one day to have their agreed upon shipments delayed for months and prices suddenly jacked up because someone else just comes along and boots them out. These are unsavory practices that are sending the market into a tailspin. Some of the larger companies like Target are now leasing their own ships, but the regular small business in Jersey just can’t do that.
Fourth, this summer, I co-sponsored the Ocean Shipping Reform Act of 2021, which takes major steps to mitigate supply chain issues and will help ensure that businesses and consumers aren’t facing untenable delays and price increases. And, I want to thank my good friend Donald Payne for his leadership on this issue in both the Transportation and Infrastructure Committee and the Committee on Homeland Security.
This bill will give the Federal Maritime Commission increased oversight over major ocean carriers by authorizing the FMC to investigate major ocean carriers business practices and apply enforcement measures — this is huge to ensure there is no collusion and companies aren’t jamming consumers for usurious profits.
Fifth, we can also work to modernize the ways and technologies that the U.S. Department of Homeland Security tracks and clears ship traffic and gets goods moving. By working with DHS, through my work on the House Homeland Security Committee, we can revamp some of the outdated processes that are contributing to the backlog. When I met with the Coast Guard this summer, and we tracked ships coming from overseas across the Atlantic and into ports like this one, they reinforced how many government agencies and little technology are involved in tracking these major ships filled to the brim with containers.
In this same vein, I’m urging DHS to bring big data into shipping control. By allowing data analysis to better inform our shipping processes, we can ensure that we are optimizing for open port locations and shipping space, and ensuring the safety of our shores and families. These changes will help people and local businesses get the goods they need, faster.
Finally, we need to give our ports the resources they need to hire more people. I want to thank the Port Authority and the ILA for their around the clock work. Thanks to them, we literally have one ship waiting here in Newark, as I said. The Longshoremen are doing a phenomenal job. However, we can still do more to ensure that the Waterfront Commission acts with deliberate speed to help get more people hired. Hiring more Longshoremen will help keep up with demand. It’s a no brainer. And we need to help the trucking and freight rail companies with the resources they need to move more goods once they land at the ports and need to get across the country. Any time we can address an issue by creating more jobs, that's a great place to start.
There is simply no reason that if we put our heads together, as we did in a meeting earlier this morning, that we can’t get more goods delivered on these ships for a lower cost for our businesses and consumers. Christmas is coming – let’s get to work. Thanks to everyone joining together today, thanks to the Port for inviting us here. I know that we are all committed to solving this problem — and that, here in the greatest country in the world, our best days will always be ahead of us.
Thank you and God bless.