It should be the best of times for agricultural exporters. Prices for soybeans, corn and wheat are at record highs. Expert after expert has testified that the signs point to a continued increase in the burgeoning world demand for U.S. ag products. Markets have grown in many regions of the world, as agricultural marketing associations have succeeded in diversifying demand so as not to put ag’s eggs in one demand basket—for example, China.
Yet an ongoing and growing crisis in container imbalances threatens to derail these good times for some specialty ag producers. Ag exporters who depend on containers are finding themselves locked out of access to the containers they need to ship their products. The problem has been evident to some shippers and exporters for months; it began to receive wider publicity after the Soya Specialty Grains Alliance began drawing attention to it in October.
With a record retail import boom being forecast for the first half of 2021, there is a real question whether ag exporters who rely on containers will find themselves even more shut out.
The SSGA is made up of growers and producers of specialty identity-preserved grains that command a high premium in the market, but that must be specially handled and containerized to maintain their value, unlike bulk grains.
On March 2, 24 U.S. senators pushed for a swift resolution to the container shipping crisis that has affected ag interests. The senators signed on to a letter to the Federal Maritime Commission, expressing support for the FMC’s investigation into reports of unreasonable practices by ocean carriers that are posing challenges for ag exporters.
“We write to express concern with the reported practices of certain vessel-operating common carriers related to the denial of carriage for agricultural commodities. If the reports are true, such practices would be unreasonable and would hurt millions of producers across the nation by preventing them from competing in overseas markets. We support the Federal Maritime Commission’s current efforts to investigate these reports and call on the Commission to quickly resolve this critical issue,” the letter began.
Led by Sens. Amy Klobuchar, D-MN, and John Thune, R-SD,–both members of the Senate agriculture and commerce committees–the letter urges the FMC to take appropriate action under the Shipping Act to halt any potential violations of the act by the carriers.
The letter questions whether carriers are engaged in “unreasonable and unjust practices” such as the rejection of U.S. agricultural cargo by ocean carriers who are shipping empty containers back overseas to keep up with the high demand for U.S.-bound imported goods.
Representatives of the SSGA recently gave testimony to the FMC, along with other national ag organizations, and last week, signed on to a letter to President Joe Biden, urging intervention from his administration.
The container imbalance may be set to grow even worse. On March 8, the National Retail Federation forecast that imports at the nation’s largest container ports are expected to “grow dramatically during the first half of 2021” as increased vaccination and in-store safety measures enable additional shopping options.
“NRF is forecasting what could turn out to be record retail sales growth in 2021, and retailers are importing huge amounts of merchandise to meet the demand,” said NRF Vice President for Supply Chain and Customs Policy Jonathan Gold. “The supply chain slowdown we usually see after the holiday season never really happened this winter, and imports are already starting to grow again. Consumers haven’t let the pandemic stop them from shopping, and retailers are making sure their customers can find what they want and find it safely.”
U.S. ports covered by Global Port Tracker handled 2.06 million twenty-foot equivalent units in January, the latest month for which final numbers are available. That was down 2.3% from December as the busy holiday season came to an end. But with a 13% year-over-year increase, it was the busiest January since NRF began tracking imports in 2002 and the first time the month has ever topped the 2 million TEU mark. A TEU is one 20-foot container or its equivalent. February results aren’t available yet, but the month was projected at 1.88 million TEU, up 24.4% over last year, while March is forecast at 1.98 million TEU, up 44.1%, the NRF said.
The first half of 2021 is forecast at 11.7 million TEU, up 23.3% from the same period in 2020, which experienced a major decline in imports due to COVID-19. Imports saw a total of 22 million TEU in 2020, up 1.9% from 2019’s 21.6 million TEU and beating the previous record of 21.8 million TEU recorded in 2018.
Keeping container prices high
Part of the problem is that China now control about 80% of global container production. The logistics publication Freightwaves carried a recent story quoting the head of one of the largest Chinese container manufacturing companies, CAI, saying that it was not likely to produce enough new containers to alleviate the container crisis. Other sources suggest it is in those manufacturers’ interest to keep container prices high.
David Murray can be reached at firstname.lastname@example.org.