The US Federal Maritime Commission (FMC) is working hard to maintain a competitive and reliable ocean cargo transportation system and enforce shipping laws that protect the public from unfair or deceptive practices. While the FMC can help stabilize some issues in its implementation of OSRA-22, American shippers must also heed the lessons of the COVID-19 pandemic in managing their own supply chains.
The pandemic revealed an unstable ocean and inland supply system, susceptible to being overwhelmed. Yet, COVID-19 was only the largest in an increasing number of disruptions over the last decade that included trade disputes with China, a West Coast breakdown in labor-management relations, the Hanjin bankruptcy, cyberattacks and increasingly severe weather. Some called these “black swan” events because they were not widely foreseen. But unlike black swans in nature, they’re far from rare since the trends contributing to such events are increasing — the further consolidation of ocean container ship companies, the growing complexity of supply chains, the increasing severity of climate change, more wars and geopolitical crises, and even more globally integrated information and population flows.
Given this, American shippers should view the need to mitigate risks as just as important as low rates. Many companies are diversifying the origins of their products or inputs, the ports they use, the routes they take and the companies they work with. However, most measures to reduce risk incur some new costs, and, when shipping rates drop low and boxes on ships become more like a commodity than a service, the temptation to get the lowest rate possible is tough to resist. Unfortunately, if shippers sacrifice strengthening their own supply chains for short-term savings, the danger is not just to them but to the entire system. Both public and private sectors must work together to reduce this danger or we will not have heeded the lessons of the pandemic.