The government has pressured shipping companies to fill empty containers with agricultural exports, but problem persists
Months after the American agricultural supply chain crisis was expected to ease, conditions seem as bad as ever.
“This is a big deal. This issue has to be addressed…. The issue is not going away,” Mike Durkin, president of Leprino Foods, a major U.S. dairy exporter, said at a Jan. 31 event.
“Over 90 percent of our export orders were rolled or missed in 2021.”
In a National Press Club event in Washington, D.C., organized by Agri-Pulse, little evidence was offered of alleviation of the critical supply chain issues hitting export agriculture.
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Empty shipping containers continue to flow out of west coast ports while exporters fume at their inability to get their hands on any.
“This difficulty is definitely creating long-term market-share loss for U.S. products,” said Danny Wan, the Port of Oakland’s executive director.
While huge volumes of filled containers are coming in from Asia, especially China, agricultural exporters generally can’t get access to the emptied containers because quickly shipping empties back to Asia makes more money for shipping companies than waiting to load low-value products.
That’s a logistical problem being tackled by some legislation that has been passed by the U.S. House of Representatives, called the Ocean Shipping Reform Act, which attempts to pressure shippers to fill empties when there is demand.
The bill’s two authors spoke at the event, pushing for its approval.
“There ought to be a law, and by God we’re going to get a law,” said representative John Garamendi, a California Democrat.
Agriculture secretary Tom Vilsack announced a new agricultural container loading facility at the Port of Oakland, which saw itself cut off from most agricultural exports early in the pandemic. On 25 acres of port land, exporters will be able to load containers, which will be subsidized by the government for $125 per container.
“The hope and goal is that we’re able to expand this opportunity in other ports along the coast, in the hope that eventually we see a more free-flowing effort on the export side,” said Vilsack.
However, Garamendi said these sorts of initiatives won’t address the underlying problems.
“All that you’re doing isn’t going to solve the problem,” said Garamendi.
“The ocean shippers do not understand the word reciprocity. They do not understand that this is a two-way street, in and out. Until they get that message, all of the good things that you’re doing is not going to solve the problem.”
Reciprocity means filled container imports should be matched by exports if there is demand.
“Reciprocity is very important,” said John Porcari, U.S. President Joe Biden’s port envoy.
While the administration has been pressuring shipping companies to fill empty containers with agricultural exports, the economics of shipping are pushing shippers to move empties back to Asia.
Porcari said shippers who were charging Asian exporters US$4,300 per container two years ago have been able to push that rate as high as $13,600, while the rate for exports from the U.S. has only risen from $650 to $1,000. Getting containers back to Asia is the shippers’ priority.
Pandemic pressures have created an extreme situation, but Wan said they have exacerbated problems that were already there.
“Some of the systemic issues have actually existed in our logistics supply chain for a long time,” said Wan.
