In spite of winning the passage of the Ocean Shipping Reform Act (OSRA), Ag exporters say they are still challenged to ship their containers on ocean carriers without major problems.
The bipartisan Ocean Shipping Reform Act of 2022 aims to level the playing field for American exporters and importers by providing the Federal Maritime Commission (FMC) the tools it needs to improve oversight over international ocean carriers and crack down on rising shipping fees facing consumers.
However, many concerns were voiced by panelists speaking at the Agriculture Transportation Coalition (AgTC) Annual Meeting taking place at Tacoma, Washington on May 21st.
Rail Shipment Break-Ins
Rachal DeRosier, representing Johnsonville said her company exports sausages and has been experiencing break-in problems with rail shipments that make the refrigerated exports undeliverable. The company needs help from carriers to provide better temperature checks and for the railroads to provide better security: “In 2023, the company was able to ship containers via rail out of Chicago, which is the most cost effective way for us to ship. In 2023, we experienced six container break-ins due to rail seal breaches. Five of them were ocean containers. One was a domestic intermodal container. In 2023, our claim dollars to export … was 20%. To put that in perspective in 2022, that number was 1%. After the second break-in last summer, I changed shipping our containers on the rail with cable seals to bolt seals, and I thought, good. And then we had four additional break-ins. One of the issues is we're not being notified of the seal breach. Someone on the rail or in the port terminal is seeing there's no seal, adding a seal, putting it on the vessel, sending it to the export country. So it's being discovered in customs and as I'm sure everyone knows its difficult to receive a temperature download from a steamship line. So years ago, I added temperature trackers to every single ocean container. Thankfully, these temp trackers helped us tell the story of where the break-ins were happening. My assumption was that the break-ins were happening outside of LA Long Beach. However, the temperature trackers tell us it's actually happening near Chicago.
The problem also is no product is being stolen. They're opening the doors, maybe don't want sausage and leaving it for another container. We are selling product for a consumer to eat and we want our consumers to be safe and feel good about what they're eating. So, we as a company do not allow this product to be sold. We choose to destroy it, which is a really difficult claim process when nothing is stolen. Thankfully, the temperature trackers are helping us tell the story.”
Booking Issues
Natasha Vang, Touchstone Pistachio, said that so far in 2024 the company had experienced booking changes in 29% of its bookings causing disruptions in trucking and warehousing of pistachios. Vang cited one such example: “We were currently able to in gate our container on the 18th, 12 days after we had pulled it … And while we didn't receive a detention bill for this instance, it did come at a cost. There was time spent, chassis charges that we incurred every day. In some instances, these changes happen while the containers are on their way to the port and we were forced to put them into storage. This resulted in an 18 day delay in my customer receiving our pistachios. They were depending on them.”
One positive outcome was that ocean carrier MSC worked with Touchstone to address the problems they were having: “Remember that story I shared that experience is not the same experience we have with with all carriers. You can see that 16% of these mark changes are with MSC, but I have to say that 16% doesn't seem as bad. Why? Because MSC stepped up to the plate last year, listened to their customers and continued putting in effort to make change.”
SB&B Foods Cite Concerns
Janelle Stahl, SB&B Foods cited a number of concerns.
Stahl told the AgTC audience that SB&B exports soybeans to Asia and that she and her team are challenged by continued problems with service: “Our headquarters are in Casselton, North Dakota … We ship food grade soybeans to Asia for use by food manufacturers … We use truck rail and ocean to get our product from the interior of the US to our customers. The inland rail terminals that we utilize are in Minneapolis and St. Paul, Minnesota…. Some common challenges that my logistics and documentation team and I deal with daily are changes in earliest return and latest return dates, otherwise known as ERD and cut dates, equipment shortages at the depots, poor equipment, not allowing truckers to inspect containers before out gating and other depot inefficiencies, carriers invoicing incorrectly and other carrier disputes, theft and break-ins during rail transit and damage to containers at port terminals and canceled and declined booking requests. I could talk extensively about all these, but today I'm going to focus on the first on the list changes in ERD and cut
dates.”
She cited an instance where a carrier changed the ERD on container exports of soybeans causing major disruptions to trucking and warehousing operations She is proposing enactment of a law to require enforcement of ERDs:
“Our warehouse needed to replan their schedule for the week. This interrupts production because they now cannot plan for that order to load. The current week is now underbooked and the next week is overbooked. Their warehouse is over capacity and bins are full … Our growers are not able to deliver their soybeans from their farm due to our warehouse. Now they get frustrated, frustrated because their plan for the week can't go unexpected and they are forced to wait to deliver and our customers will now have a split shipment. The first five will go this week, the next nine will go next week. This means their ETA expectation is not met and our supplier rating with them goes down.“
Stahl proposes: “I would really like to work with the Federal Maritime Commission, the FMC and see there'll be a rule made that will not allow ocean carriers to change the ERD once it is at least seven days before the listed ERD on the booking confirmation. This would also mean that each carrier needs to put an ERD on their booking confirmation, which that doesn't happen all the time right now anyway, once we are within seven days of that ERD, the ocean carrier cannot change that return window and must take possession of the containers once they have possession. They cannot charge storage detention demurrage on any of the cargo in their possession. I know there are some tech companies out there that are getting really good at predicting ERD.”
Port News
Northwest Seaport Alliance CEO John Wolfe reported the Ports of Seattle and Tacoma are focusing on three objectives:
- Increasing container handling moves per vessel to 30 container moves per hour per ship to shore crane.
- Reducing rail dwell time from vessel to rail to 2 days. Currently the average is 2.7 days.
- Reducing total truck turn times at the container terminals from 78 minutes to 60 minutes.
Dave Arsenault, President GSC and formerly President of Hyundai Merchant Marine-Americas, urged AgTC members to anticipate disruptions in the supply chain and be prepared to address them pursuing three objectives:
- Diversify Your Supply Chain Gateway Strategy: “It’s not a matter of if, but when we’ll see the next supply chain disruption.”
- Are you prepared? “Select Your Supply Chain Partners Carefully: “Are you selecting partners based on the value they create or simply by who offers the lowest rate?”
- Lean On Industry Associations: “Industry associations like AgTC are a wealth of information that can help you tackle common challenges.”
John Janson, SanMar a large importer of apparel, urged AgTC members to pursue long-term relationships with carriers and echoed Arsenault. He urged exporters to go and visit the headquarters of the ocean carriers and meet with executives so that there is a relationship with senior management: “This will pay huge dividends.”
Janson warned that “ It is too easy to shift to tactical shipping which then makes you a tactical customer. Develop a long-term strategic relationship.”
