27-Jan-2021
03:18:55
US Ag Exporters Come Up Empty 01/27 15:17
Shippers Sending Empty Containers Back to China Instead of Loading US Ag
Goods
Agricultural shippers that rely on a steady supply of empty cargo containers
have seen orders for hundreds of millions of dollars delayed or outright
canceled by shippers. Because of demand for Chinese products, shippers would
rather deliver empty containers back to China where they are quickly loaded
with more profitable cargo to send back to the U.S.
Chris Clayton
DTN Ag Policy Editor
OMAHA (DTN) -- While U.S. agricultural exports rose in the second half of
the year, there is mounting evidence that shipping companies are leaving U.S.
ports and returning to Asia with empty cargo containers rather than filling
them up with American agricultural products.
As first reported by CNBC, agricultural shippers that rely on a supply of
cargo containers have seen orders for hundreds of millions of dollars delayed
or outright canceled by shippers. Due to demand for Chinese imports, shippers
would rather deliver empty containers back to China where they are quickly
loaded with more profitable cargo to send back to the U.S.
Members of the Federal Maritime Commission (FMC) have launched inquiries
into practices by shippers at ports in California, New Jersey and New York to
determine if shipping companies are refusing to load U.S. export cargo at
ports, which would be a violation of the Shipping Act of 1984.
While the fourth quarter of the year is the peak season for U.S.
agricultural exports, complaints from agricultural exporters to the FMC state
that shippers began aggressively refusing to provide empty containers to
agricultural export companies as early as October.
Bob Sinner, president of North Dakota-based SB&B Foods, told DTN in an
interview Tuesday that the food exporters such as his company have been
struggling since October to get containers. For shippers, the reality is they
can get "five to six times more revenue" by bringing Chinese goods to the U.S.
than sending agricultural exports to Asia. Sinner said his company has been
requesting bookings on vessels as much as eight weeks in advance, but carriers
are saying vessels are full. Carriers also are canceling orders and saying that
vessels are overbooked. This is becoming a significant problem exporting to
food companies in Asia that are set up for just-in-time shipments.
"It's very, very painful when you don't get something shipped on time, or
you have a two-, three- or four-week delay," Sinner said. "I have logistics
staff coming in with tears in their eyes because they are just so frustrated
right now having to deal with this stuff every single day."
Data from the U.S. Census Bureau shows carriers rejected as many as 177,938
containers known as TEUs (20-foot equivalent units) in October and November,
CNBC reported. The vast majority of the empty containers leaving port were from
the ports of Long Beach and Los Angeles, though ports in New Jersey and New
York also reported high volumes of empty TEUs leaving ports. Data shows a high
volume of empty containers leaving U.S. docks as quickly as possible rather
than being loaded with U.S. export products.
CNBC stated, "In mid-October, carriers notified agricultural exporters that
they would prioritize empty export containers over agricultural exports. They
also said they would increase prices on agricultural exports if the commodities
were transported."
The total lost value of agricultural export trade from the empty containers
for October through November was $632 million in business. Going back even
further, the volume of empty cargo containers leaving port from July through
November suggests the container deficit valued $1.1 billion.
Two members of the Federal Maritime Commission -- Carl Bentzel and Daniel
Maffei -- sent a letter to the World Shipping Council in December raising
concerns about shippers refusing to carry U.S. exports. The commissioners noted
in their letter that, "It is imperative that we strive for a balanced trade to
keep our supply chain fully effective and efficient while maintaining vital
export opportunities for the U.S. agriculture and manufacturing bases."
Peter Friedmann, executive director of the Agriculture Transportation
Coalition in Washington, D.C., told DTN that problems with shipping
agricultural goods began early in the pandemic when Chinese shipping came to a
halt and it became hard to get any container ships back across the Pacific for
agricultural exports.
Then, China began ramping up again, and U.S. imports of goods started rising
over the summer. That started to overwhelm the capacity of shipping vessels.
It's a no-brainer for the shippers because a cargo of Chinese electronics or
clothes going to the U.S. could pay as much as $8,000 per container, while an
export of agricultural goods leaving the U.S. might pay $300 to $1,000 per
container.
"So they just want to take those empty containers back to Asia as fast as
they can and fill them up again with import goods, which leaves some of our
agricultural exports stranded here," Friedmann said.
While U.S. agricultural exports are ramping up, the discrimination against
farm products is apparent, Friedmann said. An array of agricultural products
are affected, including soybeans, forest products ranging from paper to lumber,
cotton, almonds and hay, just to name a few.
While a couple of commissioners on the FMC have raised their concerns with
inquiries and letters, Friedman said the commission hasn't launched a full
investigation action against the shippers yet with its Bureau of Enforcement.
That would translate into enforcement letters and even potential subpoenas to
ocean carriers for their records, which would cause the shippers to take some
actions to remedy the situation.
Sinner said shippers were initially indicating delays could carry into the
Chinese New Year, which is next week, but Sinner said now his company and
others are being told these moves by shippers could last much longer. But
agricultural companies do not have time for a long delay to get the Federal
Maritime Commission or Congress to act.
"At the end of the day, these are food companies that rely on us," Sinner
said. "What happens is you end up being labeled as unreliable. So it's very
concerning."
Shippers told CNBC that they are continuing to book U.S. agricultural
shipments, but port authorities also criticized the tactic of sending hundreds
of thousands of empty containers back to China.
"American farmers and agricultural exporters should not have to search for
containers to get their goods to market," Gene Seroka, executive director of
the Port of Los Angeles, said to CNBC. "We need a cohesive U.S. export policy
that addresses a range of issues, including container accessibility for our
agricultural markets throughout the country."
The Agriculture Transportation Coalition also is collecting reports from
export companies and now is reaching out to members of Congress, which includes
holding some Zoom briefings with lawmakers to explain the situation.
"We hope that they (lawmakers) can put some pressure on the FMC to
aggressively investigate like a prosecutor would do," Friedmann said.
CNBC report:
https://www.cnbc.com/2021/01/26/shipping-carriers-rejected-us-agricultural-expor
ts-sent-empty-containers-to-china.html
Chris Clayton can be reached at Chris.Clayton@dtn.com
Follow him on Twitter @ChrisClaytonDTN
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