Ag container exports grow despite tough market conditions

SSGA contributes to current global trade feature

By Bruce Abbe, strategic adviser for trade and transportation

The Specialty Soya and Grains Alliance (SSGA) and several SSGA members recently contributed to a prominent feature story that documented how U.S. agriculture container exports grew in 2019 and are continuing to hold their own, even in the current difficult international trade conditions.

The story, “Top U.S. Shippers: Ag exporter grow volumes despite tough market,” appeared May 22 in the online edition of Journal of Commerce (JOC), the leading intermodal transportation and logistics media source and will appear in the upcoming print edition that will feature the JOC’s Top 100 rankings of exporters and importers.

In spite of disruptions and cutbacks in trade throughout last year due to the back-and-forth U.S.-China trade tariff battle, U.S ag exports to Asian nations grew overall in 2019. Total containerized U.S. ag exports rose 6.7 percent, even though shipments to China dropped 4.5 percent, according to JOC. Increases to Japan, Taiwan and South Korea made up for much of the increases, JOC reported, citing bill of lading information from its affiliated PIERS shipping data firm. Those three North Asian nations are major markets for SSGA exporters. Growth in trade with Southeast Asian countries has also helped buoy U.S. exports.

The first months of 2020 have seen ever more trade disruptions, starting with normal import and export cutbacks during January’s Chinese New Year period. That was followed by the roller coaster ride of trade during the COVID-19 global virus crisis. Major reductions in container shipping followed in February due to quarantines of port operations and halted manufacturing in China. A surge in imports of critical goods into the U.S. that were under backlog in late February and early March once manufacturing restarted came next. But that was followed by a rash of canceled blank sailings in March and April as severe cutbacks in import demand emerged as the economic impact on global business operations due to the virus came to fruition.

This time around, the ocean carriers are focused on reducing capacity by canceling sailings and combining cargo on fewer larger ships in an effort to maintain container shipping rates. So far that strategy appears to be working, but it has led West Coast ports to cut back operations, as larger ships tend to have more port stops and longer transit times overseas.

U.S. container exporters continue to be concerned about availability of container equipment at inland locations under the reduced trade scenarios now and looking ahead.

According to JOC, a 25 to 30 percent reduction in trans-Pacific capacity is expected into June.

Short notice cancellations of sailings have proven to be an especially difficult problem for many inland exporters, like SSGA members whose containers travel 10 to 14 days by rail just to get to the ports and longer times on the water to get to customers.

SSGA member insights

JOC contacted SSGA for insights to how our member ag shippers are contending with the current shipping climate. SSGA Trade & Transportation Adviser Bruce Abbe surveyed around 20 member shippers for input, which factored into information provided to JOC.

JOC’s extensive report included this information from SSGA:

“Our shippers and forwarders say their biggest challenge is getting timely bookings and ship space,” said Bruce Abbe, strategic adviser to the Specialty Soya and Grains Alliance, which represents specialty agricultural producers and soybean exporters. “With all of the cutbacks in the number of vessels, and freight getting bumped onto fewer ships in the alliances, we’re seeing larger ships making more port calls, and the transit time to reach destinations on time is becoming an ever-greater problem. More transshipping is causing longer delays en route.”

With canceled sailings and ports of call being shifted, it’s difficult to align production at the export facilities with transportation schedules, an alliance member told Abbe. “How do we guarantee we can get [the shipment] to our customers?” the shipper asked.

Although carriers cancel sailings because of declining US imports, which constitute the headhaul lane in the trans-Pacific, when imports of containers moving to inland population centers decline, there are fewer containers available at urban hubs to be unloaded and refilled with export commodities. That creates equipment shortages for agricultural shippers in the interior of the country.

A survey of ag shippers regarding equipment availability at inland hubs revealed that equipment availability in Chicago, Kansas City and the Ohio Valley continues to fluctuate depending upon import volumes, Abbe said. “Chicago is a moving target right now. One week, one carrier will be short. Next week, it will be another carrier at a different yard,” one shipper said.

Several of members of the Specialty Soya and Grains Alliance reported equipment was difficult to secure in Minneapolis, while another ag exporter cited occasional shortages in Toronto, Abbe said. Equipment availability is sufficient at West and East Coast ports, he added.

Read the full story here.