On June 14th, agricultural exporters attending the Agriculture Transportation Coalition (AgTC) annual meeting in Tacoma, Washington expressed continued concern about ocean carriers treatment of exporters, but many seem to agree that passage of the Ocean Shipping Reform Act had alleviated problems with carriers including addressing some detention and demurrage problems.
AGTC Executive Director Peter Friedmann noted that record penalties imposed by the Federal Maritime Commission (FMC) on several ocean carriers had created a “new era” in which greater fairness was accorded to exporters and importers.
Ag Shippers Speak Out
John Janson representing SanMar, a leading importer of textiles, seemed to epitomize sentiment at the AgTC by conceding that the intervention of the Federal government had a positive impact on exporters and importers: “We are excited to see that the federal government has gotten involved in the ocean industry. And I can't believe I just said that! I'm excited to hear that the federal government is involved with the ocean industry, but what the heck?"
Interestingly, Janson said SanMar’s move to shift some import textile containers through East Coast ports was not a success. And so SanMar has resumed utilizing West Coast ports: “When the West Coast ports were really starting to become an issue, we moved almost 30% of our volume to the East Coast. And we played with that (for imports from) Bangladesh, India, Pakistan, Myanmar, and we can move that all the way to the Savannah and bring it in through there. We since have brought that back because we felt that we saw challenges on the East Coast. Now it's like holding my breath that this is not something that we're going to regret.”
In a panel discussion, U.S. agricultural exporters indicated that a number of challenges remain: Aliza Lazanoff, SunWest Foods said her company ships rice from California to export markets and urged ocean carriers to provide more predictability and better communication.
Paul Baker, JBS (protein, beef, pork, exports) said “things are getting better” in 2023. JBS moves 98,000 reefer containers per year.
Todd LeSage, Consolidated Grain & Barge, said that during road congestion times the company moves grain by river rather than road. During the grain harvest, the company moves 130 containers per day. However, container loads were reduced from 58,000 pounds to 52,000 pounds in 2017 as a result of the UP and BNSF railroads mandating reduced loads per container. The situation got worse under COVID when orders had to be split over a number of ocean carriers because of difficulties finding space for exports: “So that (weight reduction mandate by UP and BNSF) … increased our booking quantity from 80 containers ... to 88 containers of bookings. We did not eliminate congestion. We produced more congestion by bringing more containers in. So, it was a very, very difficult time for us to manage that. Then we kind of recovered from that. We adjusted our scales. We did everything that we needed to do. Then the COVID challenge happened …We all experienced the changes in the world; vessel schedules, ERDs, all these things changed at that particular point in time … So, now we are moving the same amount of cargo, but we are moving more bills of lading, more contracts, more backroom paperwork … which puts an extreme stress on our staff.”’
Chris Jennum, Dairy Farmers of America, discussed challenges for shipping milk exports from various ports that included the Port of Oakland which receives product trucked from Nevada. In 2023, this became challenging due to heavy snow fall shutting down the California-Nevada freeway connection via Interstate 80: “We experienced a lot of challenges …. this winter was … a record-breaking winter in that area with snowfall and I-80 being shut down.” Three inland shipping points are: Kansas City, Dallas, Fort Worth, and Cleveland: ”We dray … from the plant locations (to) rail ramps. And then those containers go to usually either Los Angeles, Long Beach or Savannah, Charleston on the East Coast … We put our containers on the rail and sometimes it's hope and pray … you know, we don't really know if the booking is going to ship … all the containers are going to make it until … it's actually shown loaded on the vessel. So, we experienced those splits that were mentioned earlier by (Consolidated Grain & Barge) That's very problematic for us."
Thomas Santos, Wilbur-Ellis (forage, animal feed exports), noted: “On the export side, what we export is forage and feed.” The company transports product via rail in containers from Chicago to Los Angeles, Long Beach or Oakland, Seattle, Tacoma and through the Gulf and South Carolina. The exports go to Japan, Taiwan, Korea, China, Southeast Asia, India, Australia, New Zealand, Europe Central and South America.
Santos also has had concerns with ocean carrier practices: “Now, I don't have an issue with the carriers in terms of what has happened. When there was congestion, they couldn't get all the containers back, they couldn't give it to us always. My issue was the fact that they didn't load those vessels back to our traditional model. Now they have a lot of different reasons why they didn't do it, but today we're, we're looking at a market that's very challenging for us to trade in.”
Ocean Carrier Perspective
Peter Levesque, President CMA CGM (America) and American President Lines defended the ocean carriers to the AgTC audience. Levesque made the following points about CMA CGM’s attitude toward exports.
Commitment to exports: “When it comes to market share, we're the first in bulk… We're the first in hay, animal feed, dairy food stuffs. And we're number two in market share for paper, cotton, and timber. And believe me, we're working, doing everything we can to be number one in those categories as well. And I think the reason why is because we understand what drives your business. Because a lot of that drives our business. We understand the impact of a strong US dollar. We understand the impact of softening commodity prices. We understand the very real effects of climate change. And we know that it's critical that this industry find new markets. And you have our commitment that as you're looking for new markets in Africa, India, Latin America, Mexico, wherever it may be.”
Building new ships and chassis: “So for all the uncertainties that you have in your business, shipping should not be one of them. And we've spent a tremendous amount of dollars investing and reinvesting back into the business in order to be able to provide you with the best service as possible. As an example, we purchased 92 more ships. We have 22 methanol ships being constructed right now. As part of our commitment to zero carbon, we've added 960,000 containers to the fleet and 5,500 chassis. And a little more than a year ago, we decided that air cargo needed to be an important part of the services that we offer for perishable goods and for time sensitive materials.”
Worsening U.S. China Relations: “If you talk to people in (Washington) D.C. they'll tell you that the China-US relationship has never been worse ... We've lost our China hands, the people that we used to have that would go and negotiate … Because of that, we have tensions. We have tensions in the South China Sea. We have tensions potentially with Taiwan. And we have to ask ourselves as shipping companies and as shippers: What happens if there are issues in the South China Sea? What happens if those trade lanes can't be used anymore or for a period of time?”
Regulatory Challenges with the Federal Maritime Commission (FMC): “It's been an interesting time. I'll say with the Federal Maritime Commission. CMA has every intention of following the rules of the game. It's very hard to follow the rules, though when the goalposts keep moving. We need some definitive regulation to come out from the FMC so that we know what it is that we're supposed to be doing. And I guarantee you that when that comes out, CMA will be doing exactly what it's supposed to be doing. But this has gone on a while, and we really need to get these things settled.”
Better Service: “As an industry, unfortunately, we've been slow to apply a lot of the latest technology. I do think … during Covid it became very evident that we need to ramp it up because the tech is there … I also want to comment on, on something in terms of export, because I think there's a, there's an export fallacy … about carriers not wanting export. Completely false … We spend a lot of time at CMA focused on exports because exports bring balance.”
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