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Ocean carriers are making it more difficult and costly to ship American food exports. Industry groups want federal regulators to clamp down on “unreasonable, unjust practices.”
U.S. exporters are struggling to send food abroad as the global shipping system strains under unprecedented pandemic demand.
Potatoes are piling up in storage, grain is idling in bins, and hay is stacking up on fields, due to a confluence of disruptions in the international supply chain. These are the consequences when more and more American agricultural exports arrive at their destinations late—if they even make the journey at all.
“I had a lot of product that should have moved a month ago, two months ago—it’s still sitting on the farm,” said Shawn Clausen, president of Stokrose Farms in Warden, Washington.
“We’ve had some shutdowns at ports. Every time that happens, it adds to the backlog.”
A similar situation is unfolding across many agricultural sectors, amounting to what the industry is calling an “export crisis” that could lead to shrinking markets abroad if backlogs aren’t cleared soon. “What’s at stake now is our exporters are unable to be dependable suppliers to the global marketplace,” said Peter Friedmann, executive director of the Agriculture Transportation Coalition, a lobbying group for shippers.
In a letter to the Biden administration last week, the coalition attributed these disruptions to “unreasonable, unjust practices” by international shipping carriers, and called on the federal regulators and Congress to do more to rein the companies in.
At the root of this issue, supply chain experts say, is that shipping ports are incredibly congested right now. That’s happening for two reasons: First of all, Americans are buying a lot more imported stuff, with demand for everything from personal protective equipment to household items at a record high. On top of that, there are ongoing labor shortages due to pandemic which means that it’s taking a lot longer to unload and load cargo.
Exporters also contend that international shipping carriers are making matters worse by refusing to take American agricultural products abroad.
“We’ve had some shutdowns at ports,” said Jessica Brady, marketing and sales manager at Hillebrand, a logistics company that specializes in beverage transportation. “Every time that happens, it adds to the backlog.”
But this isn’t just a story of overburdened ports. Exporters also contend that international shipping carriers are making matters worse by refusing to take American agricultural products abroad. (For those who aren’t familiar, exporters are companies that sell goods to customers abroad. Shipping carriers do the actual job of transporting cargo across the ocean.) In a bizarre twist of pandemic supply-chain economics, it’s actually more lucrative for carriers to rush empty shipping containers back to countries like China than it is to wait and fill the same containers up with American ag exports. In China, these empty containers can be quickly refilled with U.S. bound products.
The basic fact is that shipping carriers make a lot more money transporting stuff to the U.S. than from it. As a result, carriers end up prioritizing the former at the expense of the latter when there’s a logjam. In October of last year, for example, one of the world’s largest shipping companies announced it would restrict its transportation services for North American food exports in favor of imports. A CNBC investigation in January estimated that practices like this resulted in $632 million in lost exports.
“We had potatoes that we were trying to send to the United Arab Emirates, and they had to sit in our port for 30 days before they even found space on a ship.”
“Shipping lines will not take export-loaded containers if there is an empty container ready and available to go back,” Brady explained. “Because you can turn an empty container in Asia faster than you can turn a loaded agricultural product.”
This tracks with what food exporters say they’re dealing with on the ground. In Idaho, for example, they’re facing extended delays in getting potatoes onto boats, said Ross Johnson, international marketing director for the Idaho Potato Commission.
“We had potatoes that we were trying to send to the United Arab Emirates, and they had to sit in our port for 30 days before they even found space on a ship in order to be able to spend 45 days on the water,” he said. “It’s very concerning for us.”
Potatoes also need to be shipped in refrigerated containers, which ocean carriers are offering less often, Johnson said. “We have to beg for it right now.”
“Even if the shipping line is the one who changed the schedule, [or] the terminals say, ‘You can’t bring these in for a week or two’—we are penalized.”
On top of persistent delays, exporters also say that they’re being unfairly charged penalties for failing to return shipping containers on time: “Even if the shipping line is the one who changed the schedule, [or] the terminals say, ‘You can’t bring these in for a week or two’—we are penalized,” said Scot Courtright, logistics manager of Courtright Enterprises, a hay exporter in Washington state.
Such practices would directly contradict recent Federal Maritime Commission guidance on what kinds of fines are reasonable for carriers to charge. But ag exporters say the directive has been largely ignored, and want to see stricter enforcement—and sooner.
In the meantime, Hillebrand’s Brady expects that backlogs will persist for at least through the spring, though things might take a turn for the better as more and more port workers get vaccinated.
“We are looking at the next 2 months for sure being tight,” she wrote in an email. ”Hopefully by summer things will be more fluid.”
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