Competitive shipping trends and developments

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

Sky rocketing rates and demand for container imports to the US leading to service challenges on the Trans Pacific

The transportation news media over the past week has continued to cover the latest trends in container shipping, most notably the ongoing surge in demand and sky rocketing rates for high value imports on the Trans Pacific trade lanes coming into the U.S. While U.S. exports haven’t yet seen the rate increases, that surge had led to extraordinary pressure on ocean carriers to get containers back to Asia – China in particular – and it is starting to have a downstream impact on service for exporters.

Import surge creating imbalances
Two industry experts told Freightwaves news site last week that bookings of imports into the U.S. are up nearly 90 percent, year-over-year compared to 2019. The combination of projections of reduced trade due to COVID-19 leading carriers to cancel sailings early in the year – when, in fact, there was a surge in demand for personal protection equipment, E-consumer and health products – has led to the high rate increases and bulge in demand during the fall peak season.

The ocean carriers are reaping high profits now on imports, but the two experts predicted the current freight boom will be followed by a ‘substantial dip.’ Go here for the full story.

Container shortages rising – Freight forwarders advised the Journal of Commerce (JOC) that container shortages are “intensifying” across much of Asia due to the demand in China for shipping “high-yield” trans Pacific freight to North America. While there are struggles to find containers in some locations, there are reports of carriers loading empties on ships in various locations to reposition them to China. Go here and here for full related JOC stories.

US exporter shipment schedules pinched
The drive by ocean carriers to get containers back to China has even started to affect U.S. export shipping schedules.

At least one Specialty Soya and Grains Alliance (SSGA) exporter reports his company has had containers sitting at ports ready to be loaded for shipment to a non-China Asian destination rolled to a later vessel because the carrier is loading empties for direct voyage to China. That will mean at least a two-week delay in a food ingredient delivery to a customer. Needless to say, the shipper is not happy.

Will governments intervene?
The imbalances in service, high rates and space shortages following earlier cancelled sailing by the ocean carriers has now caught the eye of government regulators.

Chinese regulators were first reported to look into what has been going on, and reportedly suggested it’s time for the ocean carriers to add more capacity back into the trade lanes and “less aggressively” raise rates on the trans-Pacific. Go here for a more detailed story by JOC.

The volatility in rates and service has also caught the eye of the U.S. Federal Maritime Commission (FMC).

Hellenic News reported late last week that the FMC is reviewing ocean container shipping for possible non-competitive practices after east bound trans-Pacific rates recently hit record levels. The impact of cancelled or “blanked” sailings is a key focus of FMC. Globally the carriers reportedly cancelled more than 400 sailings between February and May in the early stages of the pandemic. Go here for the full story.

Freightwaves also provided more insights after reporting that China’s ministry of Transportation and Communication questioned ocean carrier representatives on Sept. 10. That meeting caught the industry by surprise, noted one expert. At least one ocean carrier has announced it is withdrawing a planned general rate increase (GRI).

One expert told Freightwaves that, unlike years past, when high rates led to over-capacity then lower rates, things may be different now for two reasons. The dozen leading container ocean carriers are now operating in just three major vessel-sharing alliances. That means it’s easier for the carriers to engineer capacity cuts, he speculated. The second reason, he said, is the practical reality that it will be difficult for the carriers to “stop blank sailings.” While the carriers might need to find some way of meeting new stringent rules if the Chinese institute the, it will be difficult for the carriers to give them up, “…because you’re talking about taking away the only thing that has worked for the carriers in the past 10 years.” Go here for the full story.

Katie Farmer named president and CEO of BNSF Railway

Congratulations to Katie Farmer, who last week was named president and chief executive officer of BNSF Railroad, succeeding the retiring Carl Ice, who had been with BNSF for 42 years of his career.

Farmer becomes the first woman to head a U.S. class one railroad, and a key railroad serving many export shipper members of SSGA.

“I have had the pleasure of working with Katie and am impressed,” said Bob Sinner, chairman of SSGA’s Competitive Shipping action team. “Katie is customer-focused and has taken the time to listen and consider alternative solutions to our container issues in rural America. Her new promotion is well-deserved and SSGA looks forward to working with Katie.”

Farmer is a longtime member of the BNSF leadership team, most recently serving as executive vice president of operations.

During his tenure, Ice led a team that orchestrated the merger and integration of the Burlington Northern Railroad and Santa Fe Railroad in 1995. Since then, the company grew to become the largest class one railroad in North America. Ice will retire at the end of 2020, but remain on the BNSF board of directors.

Go here for the BNSF announcement.

Largest container ship yet calls on East Coast ports

While it may not be as big as the huge 18,000 twenty-foot-equivalent (TEU) container ships or the mammoth 24,000 TEU ships that are starting to ply the Asia-to-Europe trade lanes, the CMA CGM Brazil at 15,072 TEU’s is no small potato among container vessels.

Last week the Brazil became the largest container ship to call on East Coast North American ports, and it made the news and captured public attention at each stop.

Halifax, Nova Scotia was the first stop, steaming in after departing from the Port of Colombo.

New York-New Jersey was the second stop on Sat., Sept. 12, where photos captured it steaming under the Bayonne Bridge to dock at APM Terminals.

The Port of Virginia in Norfolk was next, followed by Savannah on Friday morning. It pulled into the Port of Charleston Sunday, and was set to leave late Monday, for a return voyage to Shenzhen, China.

Go here and here for more coverage of the New York and Charleston news.

Inland exporters’ fears of container shortages fade with surge of imports from Asia

The dramatic surge of imports coming into the U.S. by containers over the last two months have reduced inland exporters’ fears of container shortages at the coming harvest time – at least for now.

Specialty Soya and Grains Alliance (SSGA) Strategic Adviser for Trade & Transportation Bruce Abbe was quoted last week in a Journal of Commerce (JOC) story, “Container shortages fade before peak export season.”

The first six months of the tumultuous 2020 shipping year was marked by disruptions caused by more than 100 “blank sailings” of large container vessels that normally would call on U.S. ports. Ocean carriers canceled the sailings as they tried to manage over capacity during the global coronavirus pandemic economic slide.

However, consumer demand has shifted, particularly for personal protection equipment, and with the normal peak season for imports getting underway, import demand has risen off the charts. There were almost zero new canceled sailings in September, and the steamship lines returned some vessels on the trade lanes.

Import demand has continued to climb causing major congestion at the ports, notably Los Angeles and Long Beach, which dominate the E-commerce import and warehouse trade. The Class 1 railroads that bring containers to the large Midwest distribution population centers have also struggled with a sudden surge in demand after they had furloughed workers during the first six months.

Ocean carrier spot rates from Asia to the U.S. have shot up. JOC reported that the West Coast import spot rate increased to more than $3,700 per 40-foot-equivalent (FEU), up 140% from a year ago. The spot rate for imports to the East Coast jumped to more than $4,500 per FEU, up 72.5% from last year.

JOC also reported that there is a big shortage of containers in Asia for suppliers, and it is likely to intensify in the near future.

Export supply outlook
While the ocean carriers have proposed some modest export container general rate increases (GRIs), rates for shipping containers to customers in Asia have remained low. With an imbalance favoring exporters in the near future, it is expected that rates and supply should remain in our favor, Abbe noted.

He warned, however, that market conditions change rapidly in container shipping and international trade patterns that could quickly alter the dynamics for export shippers.

“The value of the dollar has dropped recently. That’s a huge factor (in making U.S. ag exports more competitive),” Abbe told JOC.

Demand in Asia for specialty soybeans and grain has remained strong throughout. If imports to the U.S. drop in the fourth quarter and first quarter of 2021, as is often the case, and we see a return to more blank sailings at the same time the U.S. will be harvesting a huge crop with more competitive prices, equipment shortages inland and supply chain disruptions could return.

“It looks good for now.  Let’s cross our fingers it continues,” Abbe said.

Ag shipping news and developments

By Bruce Abbe, SSGA Strategic Adviser for Trade and Transportation

Major transportation legislation awaits action in Washington

As the country closes in on one of its most contentious national elections a little more than two months from now, a number of key issues await action in congress and will require bipartisan support to get approved. Among them are transportation and infrastructure bills that are critical for agriculture and trade.

The Specialty Soya and Grains Alliance (SSGA) recently joined with a host of other mainstream national and state agriculture organizations in joint communications to Congressional leaders urging passage of a Highways omnibus bill as well as a 2020 version of the Waterways Resources Development Act (WRDA).

Highways bill
On Aug. 6, more than 100 ag organizations, including SSGA and the National Grain & Feed Association (NGFA), sent a joint letter to the U.S. Senate Commerce Committee urging the Senate to move forward on a highways transportation package that spelled out a number of key concerns and needs of ag shippers. Funding for the current highway bill expires on Sept. 30.

The ag working group letter identified a number of key needs for agriculture shippers. The Agriculture Exemptions to Hours-of-Service rules, first approved in in 1995, “remain vitally important for the food and agriculture industry.” The coalition urged incremental changes to the hours-of-service ag exemption and further clarifications in the related eligible agriculture commodity definitions to enhance the needed flexibility the rules offer, including adoption of a 10% “load-shift” tolerance for truckers hauling bulk good and maintaining current trucking minimum financial responsibilities for insurance purposes.

Go here to view the joint letter.

The full U.S. House approved its version of the highway bill, H.R. 2, the Invest in America – Moving Forward Act of 2020, and reported it to the Senate on July 20. The vote was 233-188.  Go here to view a summary overview, details and actions from Congress.

Waterways bill
On July 29, the U.S. House of Representatives unanimously passed H.R. 7575, the Waterways Resources Development Act (WRDA) of 2020. SSGA joined more than 20 other national agriculture organizations in supporting passage of the bill.

The House bill included two key priorities for agriculture and other waterways, ports and inland river shippers – full use of the Harbor Maintenance Trust Fund (HMTF) dollars (rather than holding or diverting them for other uses) and an increase in the federal share of funding for inland waterways projects.

The legislation, still awaiting consideration in the Senate, would allow access to the current $9 billion plus balance of unused HMTF funds. The bill also would change the cost-share formula now used for funding inland waterways projects from the current 50% general revenue dollars and 50% Inland Waterways Trust Fund (IWRF) dollars, which are raised from barge fuel taxes paid by commercial uses of the inland waterways, to 65% general revenue and 35% IWTF.

Go here for coverage from NGFA, and here for a more detailed report from the National Association of Counties.

Go here to view the agriculture organizations joint letter.

Shippers eye Port of Montreal shutdown as longshoremen launch general strike

The Port of Montreal is a key gateway for North American trans-Atlantic container shippers, including U.S. ag exporters in the Upper Midwest that have access to rail service to Montreal by Canadian Pacific and Canadian National railways.

Now, a rolling series of strikes by union longshoremen at Montreal has gotten more contentious. On Aug. 10, the port shut down 1,100 workers of the Canadian Union of Public Employees and 150 workers from the International Longshoremen Association joined in a general, indefinite length strike when negotiations broke down. The CUPE has held a series of temporary strikes over the past six weeks.

According to reports, some ocean carriers have begun diverting incoming container ships to other east coast ports, while keeping an eye on the negotiations. Hapag-Lloyd is reportedly shifting the port call of its Detroit Express vessel from Montreal to Saint John in New Brunswick, and at least two MSC vessels skipped Montreal, going from Halifax direct to New York-New Jersey.

Go here for more detailed coverage.

Soybean exports projected to meet targets; China seeking traceability

As the 2019-20 U.S. marketing year nears its close, U.S. exports of soy and corn have much different outlooks as the industry hopes to meet volume projections.

Soybean exports are on pace to meet expectations despite a two-year low in exports to China in May, according to Reuters. These losses were offset by the second-largest volume shipped to the rest of the world for the month since 2018 and strong sales in June, which surpassed projections.

Corn, meanwhile, on the heels of a slow start to the year, is expected to come up short of projections – even with May’s total finishing as the second-largest for the month on record and the largest one-month total since August of 2018. However, sales in June fell short of expectations, leaving year-end targets likely out of reach.

For more on this story go here.

China seeking traceability
Bloomberg recently reported that China’s biggest food company, Cofco, is publicly vowing full traceability for all the soybeans it buys directly from farmers in Brazil by 2023.

This could show that the U.S. getting ahead on promoting traceability, which could have some traction in the Chinese market if non-GMO product can obtain market access.

Go here for more on this story.

Compiled by Alyson Segawa, SSGA Technical Adviser, North Asia

Hopeful signs, yet uncertainties abound in 3rd-quarter shipping

Compiled by Bruce Abbe, strategic adviser for trade and transportation

There are some hopeful signs emerging that the third quarter of 2020 could see the start of a turn-around for container shipping volumes off the U.S. West Coast after a dreadful first half of the year that saw unprecedented declines at the ports.

Yet those positive signs are mired in uncertainty over fears that the U.S. and other parts of the world could see a second wave of a pandemic-driven economic setback, as well as a resurgence of trade wars leading up to the election.

Freightwaves reported last week that blank sailings (cancelled previously scheduled container ship services) projected for the third quarter are down from the brutal first and second quarters, citing Denmark-based eeSea consulting firm. While blank sailings made up for 14% of total planned sailings in the second quarter (105 for April-June), they’ve represented only 3% so far for the third quarter, eeSea reported, saying only 26 had been announced for the third quarter on the West Coast.

Those totals contrast with recent announcements from two of the three major alliances (The Alliance and 2M) of 75 blank sailings for the third quarter globally. The Ocean Alliance has not yet announced its plans for the third quarter.

One additional sign of container shipping volumes turning around (though one not favored by shippers) is the strength of the spot shipping rates on the Trans-Pacific. Rates reportedly are at a 2 ½-year high.  Ocean carriers put through two general rate increases (GRIs) in June. Reduced capacity due to blank sailings are the key factor in higher rates, along with some return of import and export demand.

American Shipper also documented how blank sailings have sent shipping rates on a steep climb of late.

May volumes down sharply
May figures are in, however, and the numbers were abysmal for the West Coast ports for the first part of the year.

The Northwest Seaport Alliance ports of Seattle and Tacoma reported a drop of overall container volumes of 18.8% for the first five months of 2020, compared to 2019 – 1,277,227 TEUs (20-foot equivalents), the lowest since 2009 – thanks to 46 cancelled sailings. The carriers have announced 17 more blank sailings. While some ag exports remain strong from NWSA, a major contributor to the decline is reduced demand for potatoes shipped from Idaho and eastern Washington to serve food service industries overseas.

Southern California’s Los Angeles/Long Beach big port complex reported container volumes down nearly 14% for the first five months. The Port of LA’s numbers were down 19%, due, in part, to some shifting of service around San Pedro Bay to Long Beach terminals. Together the ports handled 5,901,270 TEUs, down from 6,782,331 over the same period last year.

Port of LA Executive Director Gene Seroka said he’s worried there could even be a permanent loss of import volumes to the tune of 15%, citing the effects of the trade war as well as less consumer spending and less U.S. manufacturing due to the pandemic. Canceled sailings delivered a blow to the port, according to Seroka, Freightwaves reported.  However, he added that canceled sailings estimates have begun to ease at the port for June and looking ahead.

Both Seroka and NWSA Executive Director John Wolfe have expressed concerns about the lingering effect of the trade war on container volumes at the West Coast gateways in comments during recent stakeholder virtual meetings.

The Port of Oakland reported in a June 11 news release that loaded container volumes were down 12.7% in May, with imports down 14.6% and exports down 10.7%, in line with expectations.

Second wave worries
While projections for blank sailings in the third quarter – normally the peak container shipping season as U.S. retail importers stock up for the fall and upcoming holidays – now appear to be improving as the economy opens up, there are also worries about the potential impact of a second wave of COVID 19 on the global economy and ocean shipping if personal protection measures fail to keep the virus in check.

According to news reports, global virus infections remain near all-time highs, and the chief economist of the global Organization for Economic Co-operation and Development (OECD), Laurence Boone, warned a second wave of the virus would produce a “double hit” to the economy, raising forecasts of a drop in GDP from 6% to 7.6% for the year. The OECD forecast for the U.S. was a GDP plunge of 7.3% for a single hit of the virus business impact to 8.5% with a second wave hit.

Mega-sized container ships begin making port calls

Compiled by Bruce Abbe, strategic adviser for trade and transportation

Despite chronic over-capacity among the ocean carrier container steamship lines in recent years – made far worse this year due to the economic impact of the global COVID-19 pandemic – new mammoth-sized container ships have gone into service and made their first port calls last week.

A few years back a couple of steamship lines took advantage of incentives and sweet deals to order several huge, 18,000 TEU (20-foot equivalent) container vessels manufactured by Daewoo Shipping & Marine Engineering in South Korea.

Industry observers wondered how ports, land-side infrastructure and need for balance in supply and demand would accommodate the big vessels. Previously, 14,000 TEU ships were – and still are – considered extremely large. That’s the maximum size that can squeeze through the new Panama Canal channel on the way from Asia to the East Coast market.

The orders set off a scramble by the ports to expand their infrastructure with higher- and wider-reaching cranes and deeper shipping channels to accommodate the big ships. Indeed, there have been challenges on land with storage space and added time needed to unload and load the ships.

The ocean carriers advised that the 18,000 TEU ships would serve the Asia-Europe trade routes going through the Suez Canal, with other larger ships to “cascade” down the system to serve the Trans-Pacific and Intra-Asia trade lanes.

Now the first batch of even bigger ships have entered service.

Hyundai Merchant Marine’s HMM Algeciras, a whopping 23,964 TEU containership – the largest in the world – made big news when it arrived at the Port of Antwerp, Belgium on June 12. A couple of days later it called at the DP World London Gateway at Thurrock port before heading on to the Netherlands and Germany and then returning to China and other stops in Asia.

On June 19, another huge container ship made big news on the U.S. West Coast when Mediterranean Shipping Company’s MSC Isabella, with a capacity of 23,656 TEUs, called at the Port of Los Angeles.   APM Terminals Pier 400 at LA handled a record-setting 18,465 containers.

Updates from the experts

For a recent virtual trade show, Specialty Grains Lead Dave Miller and Strategic Adviser for Trade and Transportation Bruce Abbe provided video updates on their respective areas of expertise. Listen to their updates below.

Container carriers announce more ‘blank sailings’ through September

By Bruce Abbe, SSGA strategic adviser for trade and transportation

Last week, two of the three global container shipping alliances announced more planned “blank sailings” in the third quarter of 2020 out through September. While reportedly there are signs that some ocean carriers are bringing a bit more capacity on line, general indications are that the carriers are finding it difficult to match supply with unpredictable demand and are holding onto their newfound ability to maintain higher shipping rates by limiting capacity.

Two vessel-sharing alliances, the 2M Alliance, made up of Denmark-based Maersk and Swiss-headquartered Mediterranean Shipping Company (MSC), and The Alliance, made up of Germany-based Hapag-Lloyd, Japan-based Ocean Network Express (ONE), Taiwan’s Yang Ming, and South Korea’s Hyundai Merchant Marine (HMM) announced they are planning to cancel a combined 75 sailings scheduled for the third quarter.

“Blank sailings” have appeared to be the root of so many of the disruptions and challenges shippers have faced throughout the first half of 2020 as international trade has experienced unprecedented volatility due to the fallout of the global coronavirus pandemic.

A Freightwaves report provides more detail. The 2M cancellations noted more Asia-Europe cancellations, although one service from Thailand calls on the East Coast U.S. The Alliance carriers are major Trans-Pacific service providers. Industry experts are said to expect the Ocean Alliance, the third major alliance consisting of APL (now part of CMA), France-based CMA/CGM, Taiwan’s Evergreen Line, and China-headquartered COSCO Shipping to soon announce their planned blank sailings.

Denmark-based shipping consulting firm Sea-Intelligence indicated that Trans-Pacific ocean carriers cancelled more than 120 sailings since April running into July, according to a Journal of Commerce report.

Sea-Intelligence CEO Alan Murphy explained to Freightwaves the challenges ocean carriers have had trying to predict demand during the volatility of global trade as an outgrowth of the coronavirus – from shutdowns of manufacturing in China, to rapid surge in demand to restock goods, to the current uncertainty over prospect for the economy due to unemployment, business failures and potential declines in spending.

Some positive signs
Murphy projected that ship cancellations in July are likely to be down 10-15% from scheduled — a smaller decline from May and June, which were down 20%. He also noted a positive development that some blank sailings have been “unblanked,” and “extra loaders” or added sailings have also occurred.

Other freight industry reports out the past few days are indicating a strong upturn in trucking volumes that could be a precursor to a stronger recovery underway – another factor in the difficulties of projecting demand in the volatile global economy.

While the ocean carriers are learning the advantages of protecting higher rates, they also need to fill the ships they have moving on the water. So too is there a cost for parking the behemoth container ships too long.

SSGA shippers
Exporter shipper members of the Specialty Soya and Grains Alliance (SSGA) regularly use ocean carriers in all three of the major alliances to serve overseas customers. Much of the disruptions in the first part of 2020 have stemmed from late-changing vessel sailing schedules and inadequate notice time for canceled sailings for inland shippers whose containers take 10-14 days on the railroads to reach the ports on the West Coast.

Also challenging for exporters has been tighter ship space causing container bookings to be pushed back weeks longer than normal, plus longer transit times to reach customers on ships that are making more port stops.

Veteran shipping experts know that ocean-carrier container shipping decision-making is primarily driven by the “head haul,” higher-value consumer products demand. U.S. container exports, with the exception of high-value meat and poultry refrigerated product exports, are the back haul, and container availability depends upon the volume and movement of inbound import containers.

U.S ag exports increase
Despite all these disruptions, it is worth noting that, according to a Journal of Commerce report, total U.S. agriculture exports increased 12.5% in the first quarter of 2020 compared to a year ago. U.S. export to Asia increased 11.6% during the first quarter, with exports to China up sharply after a thawing of the U.S.-China trade war that was at its peak in 2019.

One more worry – as if we didn’t have enough – there are fresh industry concerns that the U.S.-China trade war might heat up again in the coming months during the U.S. election year and concerns that China may not live up to commitments made under the Phase-One Trade Agreement.

Commerce Committee approves shipper committee

By Bruce Abbe, strategic adviser for trade and transportation

The U.S. Senate Commerce Committee approved a bill on May 21 that calls for the formation of a national advisory committee to the Federal Maritime Commission (FMC) made up of U.S. exporter and importer shippers.

The purpose of the committee will be to advise FMC on policies and operations related to the competitiveness, reliability, integrity and fairness in ocean shipping. Once fully approved, 12 members each from the exporter and importer shipper sectors will serve three-year terms.

FMC Commissioner Rebecca Dye originally proposed and has been a strong advocate for formation of the shippers committee to help under gird the initiatives of the FMC. Shipper groups and advocates believe this to be a positive move in helping to oversee the operations of the maritime industry.

FMC’s Dye honored

FMC Rebecca Dye was honored as the Agriculture Transportation Coalition’s Person of the Year last week during the AgTC’s 32nd annual national meeting.

SSGA is an active member of AgTC.

Dye was cited for her tireless investigative work over the past two years leading up to FMC’s recently approved “Interpretive Rules” for overseeing the validity of detention and demurrage per diem penalties, a particularly contentious issue between shippers, truckers, ocean carriers and port terminal operators.

During a virtual meeting that attracted more than 400 participants, a number of AgTC members spoke about Dye’s fairness and responsiveness.

“Most government officials seldom take the time to listen, let alone care about our issues,” said Bob Sinner, president of SB&B Foods, SSGA vice chairman and head of SSGA’s competitive shipping action team. “Rebecca, you are the ultimate exception. Not only have you been an avid listener and demonstrated how much you care by your actions, but you have also been a respected advocate for all of us. Thank you so much for your commitment.”

Said AgTC Executive Director Peter Friedmann: “Commissioner Dye’s unwavering commitment to improving our international supply chain spans three decades. … Her steadfastness through these years – to understand and improve the supply chain and to challenge threats to the U.S. shipping public – warrants Person of the Year recognition – only granted twice in the 32-year history of the AgTC.”

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.