Compiled by Bruce Abbe, strategic adviser for trade and transportation

Several ports serving agricultural exporters, including port-members of the Specialty Soya and Grains Alliance (SSGA), have recently been in the news for expansion and throughput improvements underway, including some with projects receiving federal grants from the U.S. Department of Transportation’s Maritime Administration (MARAD).

Northwest Seaport Alliance
The Northwest Seaport Alliance is implementing a growth strategy to be able to provide more capacity through expanding infrastructure at its main ship-loading terminals in Seattle and Tacoma to be able to handle bigger ships and improve cargo velocity. NWSA also plans to consolidate its international container terminals to two large terminals in North Port Seattle, and two or three large terminals in Tacoma, the South Port.

The Journal of Commerce notes that in 2019 there was a continued gradual decline in container volume handled by the dominant West Coast ports and gradual increase by East Coast ports. West Coast ports handed 62 percent of imports from Asia, down from 67.2 percent three years earlier; the East Coast was 32.9 percent compared to 30 percent in 2015. Gulf ports handled 4.8 percent last year, up from 2.5 percent.

NWSA would like to stem that gradual migration to the east, as well as increasing traffic handled by Canada’s ports.

Vancouver
The Port of Vancouver, B.C. recently reported it recorded its second-highest cargo volume in 2019, in spite of all of the trade conflict challenges that set shipping back at most other gateway ports.

The port handled 3.4 million twenty-foot equivalent units (TEUs) in containers in 2019, up just a bit over 2018. Global demand for Canadian grain was strong, the port indicated, with a record 28.3 MMTs handled in both containers and bulk – up 3.5 percent from 2018. That came despite a reported 37.3 percent drop in canola exports to China due to a tariff dispute.

Several SSGA container exporters ship through Vancouver, using CN or CP railroads to get there. An expansion project is underway at the port’s Centerm Terminal.

Milwaukee
Wisconsin Gov. Tony Evers last week announced a grant to support a major new agriculture commodity vessel transloading facility to be built at the Port of Milwaukee.

The DeLong Company, one of the U.S.’s largest commodity and specialty soybean exporting companies, is constructing a $31.3 million facility, which the port says will be the first of its kind on the Great Lakes.

Initially the transload operation will handle distillers dried grains (DDGS) for export via bulk vessels. It will also be able to handle other bulk grains, including corn, soybeans and wheat.

USDOT’s MARAD awarded a $15.9 million Port Infrastructure Development grant for the project. Evers announced a $4.9 million Wisconsin Harbor Assistance Program grant from the state.

“The diversity of Wisconsin’s agriculture industry is our strength, and part of our international appeal,” Evers said. “Our state’s agribusinesses rely on finding markets for the high-quality products our farmers produce. This grant connects the dots between our agricultural producers, state agencies, and businesses like DeLong that serve our agricultural community.”

Tonnage handled by the Port of Milwaukee was up 11 percent from 2018 at 2.6 million tons.

Duluth
The Duluth Seaway Port Authority announced it has been awarded a $10.5 million MARAD grant to help fund construction of a new 56,000 square foot, rail served warehouse at the Clure Public Marine Terminal; and to rehabilitate 1,775 lineal feet of deteriorating dock walls at Berths 10 and 11 at the terminal.

“We are incredibly excited by the award of the PIDP grant and we thank (MN) Congressman (Pete) Stauber and Senators Amy Klobuchar and Tina Smith for their support of this endeavor,” said Deb DeLuca, executive director of the Duluth Seaway Port Authority. “The grant supports projects that improve and broaden the infrastructure of the Clure Public Marine Terminal and the value it provides.  These projects will also allow us to expand our service capabilities at our multimodal logistics hub, which in turn helps us support industries throughout the Upper Midwest.”

Duluth Cargo Connect operates the terminal for the port authority, including Great Lakes and ocean vessel loading and unloading, plus the port’s intermodal container rail yard served by Canadian National Railroad. The new warehouse will add to an existing 430,000 square feet of warehouse space at the terminal, which is in high demand by regional businesses.

Los Angeles/Long Beach
The Port of Los Angeles received an $18.2 million MARAD grant to increase its on-dock railyard, expanding the terminals’ capacity by 10 percent, while its next door neighbor, the Port of Long Beach was awarded a $14.5 million MARAD grant to improve rail service capacity and operations at Terminal Island.

Cleveland and Toledo
The Great Lakes ports of Cleveland and Toledo in Ohio, both of which serve agricultural shippers, also received MARAD grants. The Port of Toledo’s Intermodal Project was awarded a $16 million grant to re-construct and upgrade a dock at Midwest Terminals Facility 1, and to develop a liquid transloading facility. The Port of Cleveland received at $11 million grant to rehabilitate two of the port’s main docks.    Cleveland operates the unique Cleveland-Antwerp Express, where Netherlands-based Spliethoff Shipping provides regular, scheduled breakbulk service to Europe and back, including container service – the only scheduled one on the Great Lakes.

Charleston and Savannah
The adjacent Southeast U.S. ports in Charleston, S.C., and Savannah, Ga. also received MARAD grants for improvements. Both ports serve container ag exporters.

Charleston received a grant just shy of $20 million to construct an underwater retaining wall, and to deepen three vessel berths to be able to handle larger container ships, complimenting a U.S. Army Corps of Engineers project to deepen the navigation channel to the terminal.

Savannah was awarded at $34.6 million grant to realign, rebuild and deepen its easternmost berth to be able to handle large 14,000 TEU container ships.

Click here to view all of the USDOT MARAD PIDP port grants, which totaled $280 million.

By Bruce Abbe, strategic adviser for trade and transportation

As reported in the Specialty Soya and Grains Alliance’s (SSGA) Enews last week, the coronavirus’ impact on global supply chains, particularly intermodal container shipping, is continuing to pose problems for container ag exporters.

China’s decision to keep millions of factory workers home longer after the normal Chinese New Year slowdown in an effort to contain the virus has led to an overall slowdown for container shipping. The outlook at this point is uncertain when a recovery will happen.

The Journal of Commerce reported Monday that U.S. Southeast ports are now bracing for a cargo volume drop in mid-March and April, due to the longer transit times for imports from Asia. The West Coast has already been experiencing the drop, including declines in import containers moving inland by rail. The container supply for exports is increasingly being affected.   Port leaders at Los Angeles and Long Beach, the largest container port complex in the U.S.,  predicted declines of 12 to 15 percent for the first quarter, with a 25-percent decline in February. About 40 blank sailings were forecast by the Los Angeles port leader.

The American Association of Port Authorities (AAPA) reported that cargo volumes at the nation’s ports could be down 20 percent from a year earlier, due to disruptions from the virus. An AAPA statement noted a two-week latency period for virus symptoms, which is giving ports, health officials, customs and other government officials more time to prepare for screening and possible quarantining of crew members or travelers.

SSGA Member Shippers, Customers Feeling the Crunch

Several SSGA member freight forwarders and shippers confirm that the latest shipping crisis is hitting our exporters and their customers overseas.

Container availability is an issue in a number of locations, and somewhat uneven depending on the ocean carrier and their changing vessel schedules.

Some steamship lines have space and no containers, while other lines have containers available but no space, noted two shippers who use the Minneapolis rail terminals going to the Pacific Northwest (PNW).

Inland locations are feeling the pinch, notably Chicago, Kansas City, Ohio Valley and Minneapolis, another large shipper said.

“Equipment seems the same as always. None inland, and more at the ports – because there are no vessels for empties either,” advised one forwarder who arranges shipping from several ports. “Freight already was increasing. Not sure yet how it will all pan out.”

Another SSGA member noted, “We have five rail cars of wheat sitting on demurrage. I’m sure we aren’t the only ones.”

The next new bookings being taken by the carriers, several members noted, are in April and could be out further.

Another member shipper simply described the situation as “a huge mess.”

When asked if some destinations are getting hit harder than others by cancelled sailings, one shipper said Southeast Asia locations are feeling the pinch, particularly those served by feeder vessels handling transshipments.

Another member shipper pegged the real issue, “It is all about the customer’s inventory that translated directly to the seriousness” of the impact. More and more SSGA identity-preserved grain and oilseed exporters have been seeking to provide steady supply relationships with longer term customers.

Turning the Corner?

The president of the Port Authorities group told Freightwaves, “Things will rebound eventually and indeed we’re hearing news about factories that are coming back online in China and ports there are ramping back up to move the cargo…”

Indeed, a report in the South China Morning Post said both the government and business is eager to restart China’s economy. The prominent columnist said, after a month of extensive city lockdowns and travel restrictions in response to the COVID-19 outbreak, China’s workers and small businesses are now getting back to business as usual. He also warned that could spell risks of a second wave of the virus. The World Health Organization says the risk of the coronavirus spreading globally is ‘very high.’

A move to ramp up supply chains again is good news, the outlook globally is still uncertain for shippers.

In a normal year, the biggest container shipping conference in the world, the JOC’s Trans Pacific Maritime (TPM) Conference, would be taking place this week. The conference draws more than 2,000 ocean, rail, trucking and transportation technology executives to a four-day conclave at the Long Beach Convention Center. The conference was canceled Saturday following advice from health officials and the global increase in cases of the virus, including on the West Coast.

Compiled by Bruce Abbe, SSGA strategic adviser for trade and transportation

The coronavirus continues to roil global shipping and supply chains, and according to industry news reports, the outlook continues to worsen. Agricultural shippers, including Specialty Soya and Grains Alliance (SSGA) exporters, are feeling the pinch on both ends  – at overseas destinations and here in the U.S. – with recovery prospects pushed out until April or beyond.

Wall Street caught its own version of the virus on Monday, with the Dow dropping 1,000 points in the afternoon over fears of the impact to global economic trade and logistics.

Freightwaves provided a timeline for the coronavirus outbreak across ocean, air, truck and rail transportation. They speculated at what point hard hit countries, like China, will need to decide if and when to switch from a containment strategy, which has seen factories shut down and people staying away from jobs and population interaction, to more of a mitigation strategy.  Mitigation, because commerce and product supply – food among the most important – will need to be moved. There are risks that mitigation strategies might not be as successful, leading to unforeseen economic consequences.

A check with SSGA member shippers found the impact is beginning to hit exporters in the U.S.

One SSGA freight forwarder member noted that the immediate problem is dealing with all of the blank sailings that keep increasing. Shippers cannot get bookings until April, and those may end up getting pushed out even further if there is not a turn around. Container shipments are being rolled to later departing ships, and it’s a scramble to find a vessel going to the planned destination, with delivery dates an increasing unknown.

The worsening challenge for inland container exporters is finding available equipment. With China shutting down factories and supply chains, there has been a huge drop in import containers coming to the West Coast and then inland to Chicago, Kansas City, Minneapolis, Columbus and other key inland locations. A shortage of containers going inland means a shortage of export containers able to go back out, regardless of the destination.

China is still the source of 65 percent of the Trans-Pacific container imports to the U.S., according to IHS Markit statistics. Peter Tirschwell from the Journal of Commerce wrote last Friday that China was in the early stages of restarting manufacturing following the coronavirus outbreak. The Trans-Pacific is not the only trade lanes being hit. Alphaliner reported that the ocean carriers blanked 46 percent of its container capacity due to the virus fears. One major forwarder told Tirschwell that the extended shutdown could be a “prelude to an overwhelming surge” in demand once the factories kick back into production.

An SSGA food soybean exporter noted the timing was particularly bad for his company, which had been looking at one of its best years. With its key shipping period now being pushed out months from now, it’s going to be a challenge for both his company and its customers overseas who need reliable, timely delivery.

Boston-based container shipping data firm CargoMetrics released data last week that documented the rapid collapse of cargo shipping from China, the original source of the outbreak. Chinese imports “are totally in freefall,” said Scott Borgerson, CEO of CargoMetrics in a recent Freightwaves report.“While China’s own export trends were described as “ugly.” What happens in the next two weeks is “critical,” he said.

Shipping news sources identified the “reefer” container export trade as being among the earliest hard hit sectors. With trucking and delivery channels being shut down in China in an effort to minimize the spread of the virus, refrigerated containers that bring in perishable food products like meat, poultry, fruits and vegetables were piling up at the ports. There is only so many “reefer plugs” – power sources -available for the computerized refrigerated containers. Ocean carriers have begun diverting the containers to other ports. That too comes at a particularly bad time. After an estimated 40 percent of China’s hog population culled due to the African Swine Fever (AFS), meat exports from the U.S. to China have been on a sharp rise and one of the few U.S. bright spots in international trade.

On a more positive note, a check with an SSGA bulk grain member exporter found that the large bulk vessel grain and soy shipments appear to have not yet been hit with cancelled sailings and diversions.

“So far, the bulk vessel trade seems to be continuing without the disruptions that have hit the container trade,” says Gary Williams, vice president of marketing and business development for United Grain Corporation, a major grain trading exporter with ocean loading facilities on the Columbia River in Washington state. “Although that could change. We’re watching it closely.”

People need to eat, and the livestock and poultry herds will need to be fed. As long as the Chinese will allow the trucks to pick up and deliver soybean meal to the herds, the soybean shipments to the processing plants hopefully will continue and even pick up from the trade war decline.

However, a report out last week in World Grain confirmed what an SSGA member container feed exporter had heard – that poultry farmers in China’s Hubei and Hunan provinces have started to cull thousands of young chickens due to a shortage of feed stemming from in-country transportation restrictions due to the virus. China is reportedly releasing corn from government held stocks.

Right now, SSGA member shippers and their logistics providers are doing their best to find work-arounds to serve their customers. Visibility, particularly on estimated times of arrival, is a hard item to come by at the moment. It’s a critical time for SSGA shippers to make extra effort to maintain close communication with customers and supply chain service partners.

Compiled by Bruce Abbe, strategic advisor for trade and transportation

The rapidly expanding outbreak of the novel coronavirus is causing major disruptions to global supply chains and international public transportation.

On Monday, the national Agriculture Transportation Coalition (AgTC) publicly called for container ocean carriers to extend a period of ‘free time’ allowed at port terminals so that container shipping exporters and importers would not get hit by unfair per diem penalty charges when their freight gets held up for events beyond their control.

The government of China – where the virus got its start – announced it has extended the official lunar new year holiday period, which started Jan. 25, for three more days through Feb. 9. The Chinese New Year holiday, as it’s often referred to, traditionally brings a significant slow-down in trade and freight transportation from Asia. China essentially bought some time by extending the holiday period throughout the country by three days to provide more limited interaction of people before shipping and commerce restart in a big way. News reports, however, note the shipping slowdown due to coronavirus may now extend well beyond out into March.

Industry sources note more ship sailings are being cancelled, on top of the trend of blank sailings that grew steadily in number throughout last year due to overcapacity during the U.S.-China trade war.  We’re hearing that multiple ports in China have been waiving storage fees on cargo, but the ocean carriers have been silent as of this writing on extending their higher cost detention and demurrage penalties beyond Feb. 9.

In an open letter to ocean carriers AgTC Executive Director Peter Friedmann said AgTC members – including the Specialty Soya and Grains Alliance (SSGA) – appreciate that most of the steamship lines have extended their free time periods in line with China’s extension of the Lunar Holiday for three days. Friedmann also urged more time be allowed due to the extreme global crisis situation.

“We now seek further guidance with regard to our export cargo landed in China, or imports marshalled for and awaiting export. Unfortunately, the World Health Organization (WHO) and national health agencies predict the coronavirus will be a threat well beyond Feb. 9,” Friedmann wrote, pointing out efforts to suspend cargo and passenger movements to prevent the spread of the virus can also be expected to extend beyond that period.

Friedmann called for ocean carriers to announce they will extend ‘free time’ beyond Feb. 9 and “until such time that the WHO, national authorities and/or air cargo carriers believe normal transportation services at the ports and inland China can safely resume.”

“While this is open-ended, our U.S. exporters need assurance they will not be charged detention (per diem), or demurrage while the supply chain remains dysfunctional due to the coronavirus,” Friedmann said. He also expressed shippers’ readiness and desire to work collaboratively with carriers to mitigate the impact of the global health crisis.

The accelerating negative impact of the coronavirus on shipping and commerce, comes on top of the decline of trade last year due to the U.S.-China trade war. Freightwaves/American Shipper reported last week that 2019 was the first year in more than a decade that saw container trade on the Trans-Pacific actually decline.

Click here for coverage by the Journal of Commerce on the coronavirus impact on the container trade.