SSGA applauds Senate passage of Ocean Shipping Reform Act

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The Specialty Soya and Grains Alliance applauds the United States Senate for passing its version of Ocean Shipping Reform Act.  

The bipartisan bill, co-sponsored by Sens. Amy Klobuchar (D-Minn.) and John Thune (R-S.D.), was passed by unanimous consent on Thursday. It would provide the Federal Maritime Commission with new, additional enforcement authority, ensure a more competitive global ocean shipping industry and provide relief to U.S. exporters, including SSGA-member agricultural exporters, who have struggled with significant supply chain disruptions over the past two years.

“Our members and others have been waiting for the hope of relief,” SSGA Executive Director Eric Wenberg said. “We have been consistently messaging that we’ve needed it, and we thank Sen. Thune and Sen. Klobuchar for their leadership on this matter. We believe in the Federal Maritime Commission’s ability to act on behalf of U.S. companies, and this reform will give FMC the tools it needs.” 

The U.S. House of Representatives passed its version of Ocean Shipping Reform Act in December. The bill now goes to conference committee to work out differences between the two bills.  

“This needs to pass the House and Senate conference with speed so a workable bill that provides relief gets sent to President Biden’s desk as soon as possible,” Wenberg said. 

The Senate bill provides FMC with additional enforcement tools to address unreasonable and unfair ocean carrier practices that have been harmful to U.S. exporters, including prohibiting carriers from unreasonably declining opportunities to U.S. exports. 

In a statement, Thune said, if passed, the act “would level the playing field for American farmers, exporters and consumers by making it harder for ocean carriers to unreasonably refuse goods that are ready to export at U.S. ports.” 

Added Klobuchar: “Congestion at ports and increased shipping costs pose unique challenges for U.S. exporters, who have seen the price of shipping containers increase four-fold in just two years, raising costs for consumers and hurting our businesses.” 

SSGA has supported passage of the Ocean Shipping Reform Act and was among the first groups to sound the alarm on the supply chain crisis in October 2020 and has continued to work on behalf of its members who export high-quality, Identity Preserved grains and oilseeds to help them meet the needs of their overseas customers. 

Lack of service, carrier cancelations, delays and rising freight rates and fees have “reached a condition critical situation,” said SSGA Chairman Rob Prather, chief strategic ambassador for Iowa-based Global Processing, affected business and have had a human toll, as well, causing hardships to logistics staffs, farmers, truckers, suppliers and customers both in the U.S. and abroad. 

“This isn’t just a global supply chain issue; it’s a global food supply security issue,” Prather said. 

For specialty ag exporters, supply chain delays remain major crisis

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Situation has reached ‘condition critical,’ in some areas SSGA chairman says

The holiday rush may be behind us, but the supply chain crisis has not subsided, especially for many U.S. agricultural processors located in the Upper Midwest.

Specialty Soya and Grains Alliance (SSGA) members who export high-quality, Identity Preserved grains and oilseeds continue to have major difficulties getting the equipment they need to fulfill their orders and meet the needs of their overseas customers.

Many containers bringing consumer imports to the U.S. continue to be sent back overseas empty instead of inland where ag processors have supplies ready to be shipped.

“Specialty agriculture needs containers for food grade exports due to a food supply chain that has reached a condition critical situation,” said Rob Prather, SSGA chairman and chief strategic ambassador for Global Processing, an Iowa-based company that grows, processes and supplies Identity Preserved, non-GMO soybeans and soy ingredients. “This isn’t just a global supply chain issue; it’s a global food supply security issue.”

The United States produces the finest agricultural products in the world, including Identity Preserved soybeans and specialty grains used around the globe by food and beverage manufacturers. SSGA members’ customers abroad specifically want these products. They’ve ordered them, and they’re waiting for them.

Specialty crops shipped via container are a growing market because of consumer demand around the world. The United States must be a reliable supplier, and that means the supply chain must work for everybody. It is wrong for shipping lines, which have been enjoying record profits throughout this crisis, to deny service to ag exporters. Some SSGA members have reported they are able to ship just 40-60% of their orders because of these continuing supply chain issues.

“Dialogue must continue, and SSGA is calling on companies throughout the supply chain to participate and find ways to reposition containers where possible and unclog this system, which is so vital to the global food supply,” said Eric Wenberg, SSGA executive director. “As an American, I am surprised that one our country’s top exports is air -– in the form of empty containers. Let’s slow down the system enough so we can put something in those empty containers.”

SSGA was among the first groups to sound the alarm on the supply chain crisis, and that was 15 months ago. Continued lack of service, carrier cancelations, delays and rising freight rates and fees have made the situation as difficult as it’s ever been, according to some SSGA members.

This hasn’t just affected business either. There are real people working to make sure every link in the supply chain remains strong, and the human toll has caused hardships to logistics staffs, as well as farmers, truckers, suppliers and customers.

SSGA supported the Ocean Shipping Reform Act that overwhelmingly passed the U.S. House of Representatives in December and is encouraging the Senate to move forward with the legislation, which would strengthen the Shipping Act and prohibit ocean carriers from unreasonably declining opportunities for U.S. exports.

More solutions are needed and fast. While time is of the essence, SSGA is hosting a shipping conference, Transportation Go, March 3-4 in Milwaukee, Wisconsin, and encourages anyone interested in solving this crisis to join us bring your best ideas to the table. More information at transportationgo.com.

Shipping News: Congress, media take notice of crisis

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The container shipping crisis continues to garner attention from government officials and the mainstream media alike. 

Last week, 24 U.S. senators, led by Amy Klobuchar (D-Minn.) and John Thune (R-S.D.) signed onto a letter to the Federal Maritime Commission (FMC), expressing bipartisan support for the FMC’s investigation into reports of unreasonable practices by ocean carriers that are posing challenges for ag exporters. 

On Tuesday, a similar letter from 111 members of the U.S. House of Representatives was delivered to the FMC. As well, a letter from senior Democrats and Republicans of the House Transportation Committee and the Coast Guard and Maritime Subcommittee was sent to FMC asking that immediate action take place “to ensure that ocean carriers are abiding by” the Shipping Act.   

Those actions came on the heels of a letter to President Joe Biden from SSGA and 70 other agriculture associations, urging intervention into the crisis. The letter was also sent to USDA Secretary Tom Vilsack, Transportation Secretary Pete Buttigieg, Council of Economic Advisors Chair Cecilia Rouse and FMC Commissioner Michael Khouri. 

SSGA’s announcement about the letter to the president with 70 other ag associations received coverage in Progressive Farmer/DTN, Red River Farm Network, FarmProgress and High Plains Journal, among others. 

Meanwhile, the New York Times picked up on the container crisis story over the weekend, illustrating how global disruptions of the container shipping system and shortage of containers and capacity are impacting supply chains in both directions – westbound and eastbound – in an article headlined ‘I’ve Never Seen Anything Like This’: Chaos Strikes Global Shipping. 

According to a Freightwaves story, the American Society of Civil Engineers gave U.S. infrastructure, which includes roads, highways, bridges, waterways, ports and rail system, an improved grade from four years ago, moving it up to a C- from a D+. The report card’s individual grades included a B- for ports (up from C+), D for roads (D), C for bridges (C+), B for rail (B) and D+ for inland waterways (D).

Competitive shipping: Container crisis dominates trade news

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Compiled by Bruce Abbe, SSGA Strategic Adviser for Trade and Transportation 

The leading international container shipping trade news media over the past week continued to focus on the current crisis in the global container shipping system. Here is an overview: 

“Trans-Pacific container system slows under Asia import surge” The Journal of Commerce (JOC) noted in a feature posted Friday that covered the proverbial waterfront on the issues at hand – the “… seemingly unending deluge of imports from Asia into North America …” clogging of the system and “slowing cargo through rail hubs including Chicago,” ever-climbing rate increases, and a reminder that this is occurring right before the traditional March start-up period of contract negotiations between shippers and ocean carriers. 

On a positive note, new services and efforts to find alternative gateways were also noted. 

“Logistics failures costing business: U.S. Exporters” Input from SSGA factored heavily in a separate JOC report that focused on challenges exporters are facing:   

(SSGA) which represents exporters of identity-preserved grains, peas, lentils, food-grade soybeans, and other agricultural products that move in containers, is hearing from its members that their problems start with a lack of communication from carriers when sailings are canceled, or departure times changed, or when vessels are overbooked and their shipments are “rolled” to subsequent voyages.  But the problems don’t stop there. 

“The ultimate kick in the teeth is when they charge you detention and demurrage for it,” (SSGA’s) Bruce Abbe said, referring to fees that carriers levy for containers that sit at the ports after free storage time elapses, or for the late return of equipment. Exporters say they are being charge for breakdowns in the supply chain that they did not cause.” 

Exporters have been urging ocean carriers to provide shippers with timely information, with adequate lead time, so that they can manage shipments and avoid costly unfair penalty fees. 

Agriculture Transportation Coalition Executive Director Peter Friedmann noted the issues at hand were addressed last year by the Federal Maritime Commission (FMC), which issued guidelines ocean carriers should follow to make such penalties serve the purpose of improving container flow system-wide. The carriers, he charged, “ignore” the FMC guidelines because they have turned detention, demurrage and other such penalties into profit moves, JOC reported.    

“Carriers are making money on these ancillary charges while their customers are losing their shirts,” Friedmann said. 

California wants FMC action, too California is also pressing the U.S. Federal Maritime Commission to take immediate action on the ocean shipping crisis to protect against the delays and rising costs buffeting the state’s huge agriculture export industry. 

California Lieutenant Governor Eleni Kounalakis laid out several possible steps in a letter to the FMC, including the suspension or reduction of detention and demurrage penalties and cancellation of “congestion surcharges”— another new onerous development at least one carrier is hitting shippers with. Better, timely communication with shippers and truckers on empty return times was another recommendation.   

“Immediate steps must be taken to help alleviate the multitude of challenges being experienced at the ports,” Kounalakis told the commissioners. 

New containers may not be enough to meet demand The head of one of the largest container leasing companies, CAI International, told Freightwaves last week the three large Chinese container manufacturing companies, which control 80% of the global trade, are not likely to produce enough containers for the industry to “build its way out of the equipment crisis.”     

They are “managing output to keep prices high,” he reportedly said. Other shipping industry consultants concurred.     

Hapag-Lloyd says COVID, congestion, container shortage make for ‘perfect storm’ German ocean carriers Hapag-Lloyd’s CEO Rolf Habben Jansen held a virtual global news conference Thursday, in which he explained developments that lead to the current crisis and what ocean carriers are dealing with. Coverage by Freightwaves. 

Logjam at LA/LB Last Wednesday there were as many as 62 ships anchored in San Pedro Bay off the ports of Los Angeles and Long Beach, waiting to get into one of the full berths to unload their cargo. A video featuring an aerial view of the anchored fleet was posted on YouTube.  

Organic Outlook: Corn, wheat face supply glut; soy market expected to remain strong

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Larger-than-expected beginning stocks and more harvested acres have placed organic corn and wheat on a bearish trend over the 2019/20 market year, according to the new Mercaris Organic Commodity Outlook. Meanwhile, strong demand and lower imports have provided support to organic soybeans markets.

Mercaris, the nation’s leading market data service and online trading platform for organic, non-GMO and certified agricultural commodities, today released its spring outlook.

Despite poor planting and harvest conditions in 2019, additional certified corn and wheat farms helped push harvests above previous estimates. In addition, corn imports rose sharply at the end of the 2018/19 market year, 12% above projections.

“Feed-grade organic corn prices have experienced a lot of pressure since last August, as harvest exceeded the industry’s expectation,” said Ryan Koory, Director of Economics for Mercaris. “With buyers expecting tighter 2019/20 supplies, a lot of organic corn was imported and stored at the end of 2018/19 putting corn markets in a perpetually long supply position this year.”

For organic soybeans, a collapse in imports from China and a reduction from Canada and the Black Sea Region point to supply constraints and higher prices.

“With China and the Black Sea Region sending less organic soybean meal to the U.S., domestic organic soybean crush has picked up the slack, tightening the overall U.S. soybean supply situation,” Koory said. “We may see this pressure back off this fall if we experience a good organic soybean harvest. But, through the remainder of 2019/20 organic soybean prices look firmly supported.”

Additional findings from today’s report include:

  • U.S. organic corn production is estimated at 39.7 million bushels for 2019/20, up 9% from the previous outlook but still down 4% year-over-year.
  • Organic soybean production is estimated at 7.6 million bushels, also up 9% from the previous outlook, but down 4% year-over-year.
  • Organic feed demand is projected at 31 million bushels, with organic wheat and organic corn silage making up a growing percentage of overall feed.
  • Organic wheat production saw a 15% year-over-year increase in 2019 at 20 million bushels, driven mostly by an increase in acres in the High Plains.

Today’s report includes additional data and commentary on expected yields, use, prices and more for organic commodities. For more information and to purchase a copy of the report, visit Mercaris. There will be a webinar on April 30 at 10:30 a.m. CT to cover these findings for those who purchase the report.

For information about COVID-19-related risks to organic markets, a free Mercaris report is also available here.

Japan Eyes Free Trade Deal With Post-Brexit Britain

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By Mina Pollmann for The Diplomat

With the United Kingdom having formally left the European Union on January 31, British Foreign Minister Dominic Raab is traveling to the Asia-Pacific region this week with stops in Australia, Japan, Singapore, and Malaysia. The purpose of Raab’s trip is to prepare the road for bilateral British free trade deals in a post-Brexit world, ideally finalizing these trade deals by January 2021, when Britain’s transition period ends.

Japan already has an economic partnership agreement (EPA) with the EU, which went into force last February. This deal will cover British-Japanese trade throughout the duration of the transition period, but the U.K. will need to strike its own bargain with Japan to replace it. Both the Japanese and British governments have expressed hopes that their bilateral trade deal will be more ambitious than the existing Japan-EU EPA. For the U.K., an aggressive trade deal with Japan is desirable as potential leverage to strengthen its position vis-à-vis the EU. But British desire for a comprehensive deal – and the very real deadline Brexit imposed – provides opportunities for Japan as well.

The main issue at stake will be auto tariffs. Under the Japan-EU EPA, auto tariffs are on schedule to be eliminated in eight years, but it is possible that Japan will press London for the immediate end of auto tariffs. Another issue is the possible inclusion of investor-state dispute settlement (ISDS) mechanisms. Such mechanisms allow for companies to sue foreign governments if they are treated unfairly. There is no ISDS mechanism in the Japan-EU EPA due to European opposition, but given that there is an ISDS mechanism in the Trans-Pacific Partnership agreement (of which Japan is a member) and the U.K. also wants to join the TPP, London may agree to Tokyo’s terms regarding ISDS mechanisms.

Japanese businesses are eager for the speedy conclusion of a trade deal that will return stability and predictability to doing business in Britain. Hiroaki Nakanishi, chairman of the Japan Business Federation, or Keidanren, emphasized the need for business input into the process. In a recent news conference, he emphasized that “Japan needs to conduct various talks with both the United Kingdom and the European Union in a public-private effort.” Japanese automakers may play a particularly large role in negotiations, as Nissan, Toyota, and Honda together make up about half of auto production in Britain.

With nearly 1,000 Japanese companies operating in the U.K., the government will be responsive to such concerns. Last Friday, Economy, Trade, and Industry Minister Hiroshi Kajiyama told a news conference, “I will tackle building an ambitious economic partnership with the United Kingdom.” On the same day, Foreign Minister Toshimitsu Motegi also affirmed, “We will quickly work to build a new economic partnership with Britain.”

Before Prime Minister Shinzo Abe’s second tenure as premier, Japan had been known for its protectionist trade policies. But Abe came in to office championing trade liberalization as a key driver of structural economic reform. After Donald Trump’s election in 2016 and U.S. withdrawal from the TPP the next year, Japan recast itself as a proponent of free, liberal, rules-based trade regimes. With additional momentum generated by the pressures that Brexit puts on British leaders, Abe may not only succeed in getting a bilateral trade deal, but also, with London, in expanding TPP to a trade bloc large enough to entice the wayward United States back into the regional economic architecture.

Thailand government reconsiders ban of chemical use

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The Thailand National Hazardous Substance Committee (NHSC) has overturned their earlier decision to ban three agricultural chemicals. The Oct. 22 decision to classify glyphosate, paraquat and chlorpyrifos as Category 4 substances was to start Dec. 1. This classification would have banned the chemicals from production, possession, importation and exportation and would require a zero maximum residue level (MRL) applied to possible exposure.

The Nov. 27 decision keeps glyphosate as a Category 3 substance (restricted use and sales), while a classification of paraquat and chlorpyrifos as Category 4 substances will become effective June 1, 2020.

Recently, Specialty Soya and Grains Alliance (SSGA) member Rob Prather of Global Processing, traveled to Southeast Asia to meet with buyers and learn more about the Thai ban. Read that story here.

SSGA looks forward to discussing this issue at the annual meeting Tuesday.

SSGA offers strong support for port terminal modernization

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The Specialty Soya and Grains Alliance (SSGA) recently sent a letter of support for the Northwest Seaport Alliance’ (NWSA) and SSA Terminal’s, LLC’s (SSAT) joint application for infrastructure funding from the U.S. Department of Transportation Maritime Administration’s (MARAD) Port Infrastructure Development Program (PIDP).

Because a majority of SSGA members ship by intermodal container to supply high quality food grade products to their customers, the NWSA Seattle and Tacoma ports handle a strong share of the exports that go to Asian markets from our base of member exporters located in the Midwest.

The funding sought by NWSA and SSAT would be used for modernization of Terminal 5, a long- time key export terminal in the Seattle Harbor that has fallen nearly dormant because it is unable to adequately serve the new larger ships deployed by the main steamship lines.

Click here to read the complete letter, signed by SSGA Executive Director Eric Wenberg.

 

Germany will ban glyphosate after 2023 to save insects

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By Sonja Begemann for AgWeb

Germany will ban the use of glyphosate herbicides at the end of 2023. The country is making the decision as part of an environmental protection program the government cabinet agreed to this week, according to Dow Jones.

Glyphosate, owned by German ag and pharmaceutical company Bayer, has come under fire in the U.S. over the past year with claims the pesticide causes cancer. Germany’s concerns, however, revolve around the pesticide’s impact on food sources for insects in the country.

Bayer provided the following statement to Agweb regarding the announcement in Germany:

We respect political decisions by some EU Member States to reduce applications of Glyphosate. However, with regards to the German government’s intention to impose a unilateral ban on glyphosate in 2023, we have a different view. Such a ban would ignore the overwhelming scientific assessments of competent authorities around the world that have determined for more than 40 years that glyphosate can be used safely. Within the European Union, we have a common legal framework for authorization of plant protection active ingredients, backed by one of the world’s most stringent safety assessment schemes.

German officials say glyphosate use leading up to the 2023 ban will be systematically reduced starting in 2020. Restrictions will be placed on not only agriculturalists, but home and business owners, too.

Court challenges continue
Bayer’s legal challenges against glyphosate are ongoing. More than 15,000 plaintiffs are coming against the company concerning Roundup (one of the trade names for glyphosate). Plaintiffs allege the herbicide causes cancer, specifically non-Hodgkin’s Lymphoma.

The next trial is scheduled for Oct. 15, 2019 in St. Louis, Mo. There have been three trials to date—all in California. In each of the previous cases juries ruled against Bayer.

Read more about safety studies, recent cases and general glyphosate updates here.

FMC approves container availability recommendations

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By Chris Gillis for Freight Waves

The U.S. Federal Maritime Commission on Sept. 6 unanimously approved a set of recommendations to bring about fairness in the way demurrage and detention fees are administered by ocean carriers and marine terminal operators against American shippers.

Commissioner Rebecca Dye delivered her recommendations to Chairman Michael Khouri and Commissioners Daniel Maffei and Louis Sola for their consideration and approval on Aug. 27.

“I would like to convey how deeply appreciative I am for all the support from my colleagues at the commission and the freight delivery system,” Dye said in an interview.

She particularly complimented the ocean carriers and marine terminal operators, as well as the numerous American importers and exporters, for their input throughout the year-and-a-half-long fact finding investigation. “I’m thrilled,” she said.

Demurrage pertains to the time an import container sits in a container terminal, with carriers responsible for collecting penalties on behalf of the marine terminals. Detention relates to shippers holding containers for too long outside the marine terminals.

In the past five years, shippers have become increasingly outspoken about the way these fees are assessed against them, often pointing out that they are financially penalized for industry events such as sudden marine terminal congestion, which are largely out of their control.

In December 2016, the Coalition for Fair Port Practices filed a petition with the FMC requesting regulatory action against unfair demurrage and detention fee assessments, which was followed by public hearings at the commission in early 2018. The FMC approved the initiation of the Fact Finding 28 investigation in the spring of 2018 and put Dye in charge.

Dye’s recommendations to bring clarity to the way these fees are assessed include:

  • Promoting standardized language for demurrage and detention.
  •  Simplifying the dispute resolution process and billing practices associated with the assessment of these fees.
  •  Providing guidance on what evidence is relevant to promptly resolving demurrage and detention disputes between shippers, ocean carriers and marine terminals.
  • Ensuring consistent industry notice for container availability and equipment returns.

To put these recommendations into practice, the FMC will soon publish a notice of proposed rulemaking to establish “interpretive” rules for addressing future demurrage and detention disputes brought before the commission by the industry. (An interpretive rule is an agency rule that clarifies or explains existing laws or regulations.)

Dye has remained transparent with the ocean shipping industry during the investigation. She has further emphasized in industry forums that more work lies ahead in remedying problems related to demurrage and detention assessments.

Among the recommendations approved by the commission will be the establishment of a shippers’ advisory board that will work with the commission on solutions to future container availability problems.

Dye recommended the formation of a shippers’ advisory board that will work with the commission on myriad issues.

In addition, Dye proposed continuing the FMC’s Memphis Supply Chain Innovation Team, which since 2016-17 has brought together shippers, ocean carriers and railroads to address the shortage of available chassis for containers arriving and departing the railhead in Memphis, TN.

“The Memphis team concluded that current chassis provisioning models are not keeping up with growing intermodal container demand and that change is necessary,” Dye said in testimony on May 22 before a Surface Transportation Board hearing focused on rail demurrage and detention.

She explained to the STB members how the Memphis team concluded that a gray chassis pool should be implemented for the Memphis rail hub.

“Major U.S. importers and exporters shared their stories of millions of dollars in inventory held up in congestion in Memphis, resulting from a lack of chassis,” Dye told the STB. “U.S. agricultural shippers believe that they cannot afford another season with current chassis issues.”

The FMC commissioners on Sept. 6 also approved Dye’s recommendation to continue the commission’s involvement with the Memphis team to implement a gray chassis pool.