Compiled by Bruce Abbe, strategic adviser for trade and transportation

Tracking the outlook for shipping during the last few weeks of the global coronavirus pandemic has been like riding on a jolting roller coaster, challenging even the most experienced industry experts to try to keep up. For Specialty Soya and Grains Alliance (SSGA) container exporter members, the quest to keep shipping to overseas customers is a fundamental reality, as people need to eat and livestock needs to be fed.

On the domestic front, the trucking industry has been stressed to rapid changes in freight markets, with demand for critical consumer, food and medical goods hitting unprecedented levels, while other sectors shut down during the nation’s shelter-at-home public and work environment.

You’ve heard this before, but it bears repeating: We are in unchartered territory here.

On the international container shipping front, the experts are now tempering recent optimism that the container shortages experienced in parts of the inland U.S. would subside now that China has apparently weathered the worst of its virus and its manufacturers and workers are back at work.

The supply chain squeeze of late January and early February due to increased blank sailings of container ships from China looks to ease up in the near term due to restocking of goods at U.S. stores. However, that respite now appears to be short-lived.

Looming prospects of a global and U.S. recession are causing the ocean carriers to once again retreat back to continued, maybe even expanded, blank sailings to deal with the economic realities of projected shrinking of trade.

Journal of Commerce (JOC) editors wrote late last week that U.S. goods owners are now cutting back or delaying imports from China, which “suggests the anticipated surge of inbound cargoes will be short-lived,” a sharp reversal from a few weeks back.

JOC noted the cutbacks and delays are uneven across commodity sectors, with medical supplies and consumer goods maintaining strong demand, while other discretionary goods are falling off.

The U.K.-based transportation consultant firm Maritime Strategies International (MSI) reportedly said, “The near-term outlook for the container-ship industry has deteriorated rapidly” due to the rapid spread of the virus and efforts to control public interaction to slow the spread of COVID-19 cases. MSI forecast the global container trade to shrink in 2020, potentially to levels seen in the last financial crisis.

The firm sees disruptions among all trade sectors, reports Freightwaves, but one difference this time, “(I)s that the shock to demand will come from the importers’ side and not the exporters’ side, which will change the incentives facing carriers when negotiating rates.” MSI is not expecting a “price war” among carriers comparable to what happened in 2016, largely due to the consolidation among carriers and emergence of just three main carrier alliances.

It remains to be seen how the inland supply of containers and sailing capacity holds for exporters looking ahead.

One perplexing question for me: What would it take for the ocean carrier to defy their past practice and mindset to come to look at exports as the “head haul,” instead of the trivial “backhaul”? Would a shortage of container shipping capacity required to move food and feed products back to Asia – where they are absolutely needed in a crisis of this magnitude – change those minds?

Bit of a dream, I concede. And yes, container exports overall have been traditionally less than imports to the U.S., even if not at all ports. Roundtrip economics would need to come into play to be fair to the carriers. But maybe the national governments might need to give them a nudge, as they are other essential service providers.

Plateaued in Asia? On one positive note, the American Association of Railroads (AAR) released its weekly report on U.S. rail traffic last week with what could prove to be good news.

AAR Senior Vice President for Policy and Economics John T. Gray told Railway Age, “The good news is that the intermodal volumes of the railroads serving the West Coast ports that receive the bulk of imports form China appear to have plateaued over the past four weeks, indicating that we may have seen the worst of the COVID-19 impacts on the Asia trade.”

On a negative note, last Friday for the first time it was reported that the crew members of a container ship had to be evacuated and hospitalized due to suspected infection by the virus. A 9,000 twenty-foot equivalent unit (TEU) Maersk ship that traveled from Hong Kong to Ningbo, China had to be evacuated. Extra precautions are being taken with the replacement crew.

Public awareness – global food supply chain issues bear attention
You may have seen it this morning, but Bloomberg News and several of its affiliates carried a well-written opinion piece titled “Food supply is the next virus headache.” It’s worth a read.

The last paragraphs summed up the message well:

“In much of the world, preemptive policies can keep things moving. China’s Ministry of Agriculture and Rural Affairs, for example, brought in incentives for sowing and mechanization in early February, as well as support for livestock farming, and ‘green channels’ to help the movement of feed, breeding animals and produce. Governments can encourage trade, rather than nation-level hoarding. As the virus spreads, wealthier countries may also need to support developing ones, especially those hit by elevated import bills and weakened currencies. Disruptions will be inevitable. A global food crisis doesn’t have to be.”

Trucking firms scrambling to adjust to changing markets; waivers granted by states and federal governments for certain trucking regs

Domestic trucking companies are scrambling now to adjust to fast-developing changes in their markets. Demand for hauling medical supplies, household consumer goods, food and daily staples has skyrocketed as truckers are needed to restock major stores serving people who are now working and “sheltering at home” due to the pandemic.

Yet demand for hauling other non-essential goods has rapidly shrunk due to plant and store closings, with workers now being laid off. Auto industry supply chain and other like manufacturers are scaling back or temporarily shutting down.

Truckers, along with health care workers, are being seen as heroes and heroines these days by the public.

Essential Businesses
Trucking, railroads, the ports and other transportation sectors, along with food and agriculture production and processing have been declared as “essential businesses,” and are not subject to mandated closures that are affecting other businesses. You can go here to view recent listings of Essential Businesses posted online by the Pennsylvania state government, which is similar to what other states are doing.

Trucking Regulation Waivers for Essential Goods

In an effort to keep critical freight moving, federal and state governments taking efforts to control the spread of the coronavirus have recognized the need to relax certain regulations for moving vital goods including food, medical and household supplies through the supply chains. The temporary waivers vary by state.

One of the best resources for tracking the trucking regulation waivers is put out by LandLine Media and the Owner-Operator Independent Drivers Association (OOIDA). The listing and links are being kept up-to-date by LandLine. You can find it here.

By Kim Link-Wills for American Shipper

The transportation industry is critical for the movement of goods. But are all employees working for transportation and logistics companies “essential” during these unprecedented times of mandatory quarantines?

New York joined California on Friday morning in ordering all nonessential workers to stay home.

The Department of Homeland Security’s Cybersecurity & Infrastructure Security Agency (CISA) has issued guidance on Essential Critical Infrastructure Workers during the coronavirus pandemic.

CISA Director Christopher Krebs said in a memorandum issued Thursday that the list of Essential Critical Infrastructure Workers was developed to provide guidance to state and local governments.

“As state and local communities consider COVID-19-related restrictions, CISA is offering this list to assist prioritizing activities related to continuity of operations and incident response, including the appropriate movement of critical infrastructure workers within and between jurisdictions,” Krebs said.

The memorandum said essential industries “represent, but are not necessarily limited to, medical and health care, telecommunications, information technology systems, defense, food and agriculture, transportation and logistics, energy, water and wastewater, law enforcement and public works.”

Krebs said, “As the nation comes together to slow the spread of COVID-19, everyone has a role to play in protecting public health and safety. Many of the men and women who work across our nation’s critical infrastructure are hard at work keeping the lights on, water flowing from the tap, groceries on the shelves, among other countless essential services.”

The CISA guidance, as listed, identifies those essential in transportation and logistics as:

• Employees supporting or enabling transportation functions, including dispatchers, maintenance and repair technicians, warehouse workers, truck stop and rest area workers, and workers who maintain and inspect infrastructure, including those that require cross-border travel.
• Employees supporting or enabling transportation functions, including dispatchers, maintenance and repair technicians, warehouse workers, truck stop and rest area workers, and workers who maintain and inspect infrastructure, including those that require cross-border travel.
• Employees of firms providing services that enable logistics operations, including cooling, storing, packaging and distributing products for wholesale or retail sale or use.
• Mass transit workers.
• Workers responsible for operating or dispatching passenger, commuter and freight trains and maintaining rail infrastructure and equipment.
• Maritime transportation workers — port workers, mariners and equipment operators.
• Truck drivers who haul hazardous and waste materials to support critical infrastructure, capabilities, functions and services.
• Automotive repair and maintenance facilities.
• Manufacturers and distributors, including service centers and related operations, of packaging materials, pallets, crates, containers and other supplies needed to support manufacturing, packaging staging and distribution operations.
• Postal and shipping workers, including private companies.
• Employees who repair and maintain vehicles, aircraft, rail equipment, marine vessels and the equipment and infrastructure that enables operations that encompass movement of cargo and passengers.
• Air transportation employees, including air traffic controllers, ramp personnel, aviation security and aviation management.
  Workers who support the maintenance and operation of cargo by air transportation, including flight crews, maintenance, airport operations and other on- and off-airport facilities workers.

The Port of Oakland posted a link to the CISA list and reiterated Friday that it was exempt from shelter-in-place orders.

California Gov. Gavin Newsom on Thursday night ordered all of the state’s 40 million residents to stay home.

“The port, airport and their supply chain partners are considered essential businesses and therefore exempt from shelter mandates,” the Port of Oakland confirmed Friday morning.

Also Friday morning, New York Gov. Andrew Cuomo said the state’s residents, with the exception of those employed in essential jobs, will be required to stay home beginning “Sunday evening.”

“We’re all in quarantine now,” said Cuomo, adding that violators will face civil penalties. “I’m not kidding about that.”

Dredging Contractors of America (DCA) said it helped craft CISA’s guidance on Essential Critical Infrastructure Workers.

“We commend CISA for utilizing the Critical Infrastructure Partnership Advisory Council and the Maritime Sector Coordinating Council in developing guidance on essential critical infrastructure workers,” said DCA Chief Executive Officer William Doyle. DCA is a voting member of the Maritime Sector Coordinating Council.

The food industry association FMI also commended CISA for including food and agriculture and transportation and logistics as part of the essential and critical infrastructure.

“This allows grocery stores and their supply chain partners to maintain their daily operations,” FMI President and CEO Leslie Sarasin said. “The supply chain continues to adapt to meet the new levels of demand and being deemed an essential workforce allows the industry to restock and replenish products across the country without interruption.”

In his task force update Friday, President Donald Trump said, “Truckers are making the long haul to keep stores stocked.”

He also said, “You’re seeing very few empty shelves.”

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.