Looming rail strike could cripple ag shipping

/0 Comments/in

SSGA is monitoring the labor situation and potential rail strike that could take place later this week and severely affect service on Class I railroads BNSF, CSX Norfolk Southern, CN, CP and Union Pacific. Norfolk Southern has already announced that it will close all gates to intermodal traffic at noon local time on Wednesday.

Negotiations have been taking place, including Monday, but Friday, Sept. 16, 12:01 a.m. EDT is the end of a 60-day cooling-off period imposed earlier this summer by President Biden to prevent a conductors and engineers strike from taking place.

While SSGA urges railroad leaders (represented by the National Railway Labor Conference) and the unions (the Brotherhood of Locomotive Engineers and Trainmen and the SMART Transportation Division conductors union) to continue negotiations, along with Federal mediators, we also recommend that exporters check with your carriers to see what contingency plans they have in place or what their recommendations are to you in the case of any service disruptions.

According to a CNBC report, the unions say they will strike if quality of life is not addressed in a new contract. And while eight of 12 labor unions have reached tentative agreements with the rail carriers (up five from last week), the BLET and SMART TD unions represent half of all rail workers.

If the impasse continues, Congress could act to prevent a work stoppage by imposing a deal or by extending the cooling-off period. President Biden does not have the authority to prevent a strike.

The National Grain and Feed Association sent a letter to the railroads unions, the White House and Congressional leadership, urging continued negotiations and also suggested those interested in preventing a strike to reach out to your own labor contacts or to your lawmakers and implore continued good-faith talks or Congressional intervention. The letter noted the “significant negative impacts on … agricultural producers, processors and consumers,” especially at the beginning of harvest around the country. “The economic damages across the food and agricultural supply chain would be swift and severe,” the letter said.

According to one SSGA member, a shipping company has reached out to its containerized exporting customers and recommended they pick up as many import containers as possible this week from U.S. inland rail ramps to avoid cargo to become stranded if a strike should occur.

SSGA advises Philippines DDGS delegation on transportation

/0 Comments/in

Fifteen poultry and livestock feed importer buyers from the Philippines learned about the current trends in container and bulk grain shipping, along with opportunities to purchase U.S. dried distillers grains with solubles (DDGS), high-quality feed products produced by ethanol plants and exported around the world. Part of a trade mission to the Upper Midwest Aug. 28–Sept. 3, the delegation was hosted by Northern Crops Institute (NCI) and the U.S. Grains Council (USGC). The experience featured an educational procurement course on DDGS feeding practices, an industry tour and information on market sourcing and current transportation issues.

SSGA contributed to the trade promotion project through a presentation and discussion led by transportation adviser Bruce Abbe. Abbe talked about current trends and gave “how-to” advice for shipping DDGS from the U.S. to the Philippines by container or bulk shipping means. SSGA exporter member International Feed also hosted the group on a tour stop for trade discussions.

The delegation included high-level executives from leading Philippines commodity feed purchasing companies, including UNAHco Inc., CJ Phils Inc., Premium Feeds Corporation, SIDC, Universal Robina Corp-Cebu Operations, Ta-Ala Farms, Robina, Longview Agri, and Universal Felix Grains Corp.

Abbe presented information on the DDGS export market dynamics and recent trends for container and bulk shipping, basic operational steps in container shipping for DDGS supply chains, and the current situation and outlook going into 2023 for shipping.

“After two years of crippling supply chain disruptions at the ports and landside on both sides of the Pacific, we’re starting to see some improvements,” Abbe said. “But we have a long way to go. …

“On-time reliability for ocean carriers has basically stood at zero for a year and a half for all carriers. It’s starting to inch up. Instead of 100 ships waiting to berth off LA/Long Beach, it was down to nine a couple of days ago. Yet, the East Coast ports are seeing more back-ups now.”

There are signs that rates are starting to soften for U.S. importers, who saw extraordinary increases. But for exporters, the smaller increases they’ve experienced haven’t come down much yet, if at all. Container availability for exports is showing signs of improvement in some locations, not others, he said.

The future should be getting better for shippers because of the large volume of new container ships and new containers on order set to come into the global system in 2023 and 2024, Abbe added.

“Nevertheless, the ocean carriers have already started to cancel sailings again, and they learned they could make unmatched profits through high rates by keeping capacity tight,” Abbe warned. “The rail network in the U.S. also is currently facing severe capacity and network congestion issues.”

In spite of those challenges, U.S. grain exporters can and are supplying high-quality DDGS to the Philippines feed industry on a continual, near-daily basis. With infrastructure improvements underway in both countries, supply chain improvements are happening.

To manage the shipping challenges, Abbe urged the grain buyers and traders to:

  • Persistently check all booking options
  • Be sure to check bulk shipping, as well as containers, as bulk may be more economical;
  • Know expected transit times and track all container shipments
  • Maintain continual communication between suppliers and buyers

SSGA and other U.S. ag shippers will continue to pressure the transportation industry, policy makers and regulators for expanded, improved service for food and agriculture shipping. International buyers should to the same in their countries, Abbe advised.

SSGA tours the Midwest

/0 Comments/in

SSGA Executive Director Eric Wenberg toured the Midwest last week, starting with the AgroExpo in St. Johns, Michigan and continuing with visits to members in Indiana.

AgroExpo featured more than 130 exhibitors, including SSGA members Legacy Seed/DF Seed, Michigan Agricultural Commodities, Star of the West and Zeeland Farm Services. Member Michigan Soybean Committee devoted space in its booth to showcase the importance of variety-specific agriculture in the state, showing high-oleic oils made from its soybeans and food soybeans like those used to make natto and tofu. It was perfect weather to spend a few days outside and learn about how diverse Michigan agriculture is in giving farmers choice with crops to grow.

Senator Debbie Stabenow opened the farm show and acknowledged the importance of the passage of the Ocean Shipping Reform Act to find better shipping solutions for exporters. Michigan Agri-Business Association President Chuck Lipstreu thanked SSGA for its work to support education and information on transport solutions for the state.

After AgroExpo, Wenberg traveled to Indiana to catch up with one of SSGA’s newest members, IOM Grains, as well as the Indiana Soybean Alliance and the Indiana Crop Improvement Association. SSGA will host its annual meeting in Indianapolis, scheduled for December 1-2, 2022. Indianapolis is a wonderful location for the meeting, with SSGA offering assistance to Indiana and stewarding specialty field crops nationally. Indiana Crop Improvement Association Director James Fung operates the association with international markets in mind, providing field inspection and audits, as well as seed variety testing that make specialty markets work in the region. Watch for more information on SSGA’s annual meeting in the coming weeks.

Wenberg’s tour will continue this week with visits to Midwest Agricultural Export Summit, hosted by the South Dakota District Export Council, South Dakota Soybean Research & Promotion Council and Sanford Health.

Transportation Roundup: Container, equipment shortages continue for SSGA members

/0 Comments/in

SSGA staff have compiled a round up of current news in the container transportation industry. Click the links below to view the original stories.

A shortage of shipping containers and equipment were again common themes in reports from SSGA member exporters in SSGA’s Competitive Shipping action team meeting Aug. 10. Multiple SSGA members reported that the shortage isn’t affecting Chicago as much, but other container yards in the Midwest remain extremely short of containers and chassis. Members also reported a trend of lower surcharges and some weakening container rates. The Competitive Shipping action team meets quarterly. Contact Katelyn if you are interested in joining the action team.

The Presidential Emergency Board issued its recommendations for a new rail labor contract, suggesting a 24% wage increase over five years. This splits rail labor request for a 31.3% increase compared to the railroad offer of 17%. If the two sides cannot reach an agreement by Sept. 16, Congress may need to intervene to prevent a strike or lockout. Read the full recommendations here.

In attempt of diversifying supply chains and build on self-sufficiency in the Midwest, the North Dakota Trade Office Duluth Cargo Connect and Valley Worldwide Logistics Solutions have established a logistics network between Duluth and Europe. The network is a single source solution for domestic trucking, drayage, ocean freight forwarding, transloading, warehousing and overstuffing. Valley Worldwide will be offering direct intermodal vessel service between Duluth, Minnesota and Antwerp, Belgium via the Great Lakes and St. Lawrence Seaway, with more worldwide routings in the works. For more information, contact Ian Nicks with Valley Worldwide at Ian@valleyexp.com or 951-233-5347.

U.S. grain exports continue to be a highlight of the Great Lakes shipping season. The Great Lakes ports traded with at least 27 countries during July, according to the St. Lawrence Seaway tonnage report. Through July, the seaway system has moved 514,000 tons of U.S. grain, a 37% increase compared to 2021. Learn more here.

While shipping container fees are decreasing in most parts of the world, five U.S. ports top the list of most expensive detention and demurrage (D&D) fees. The average D&D charge at the Port of New York is $3,182, followed by Long Beach, Los Angeles, Oakland and Savannah. Read more from CNBC here.

Transportation Roundup: Federal agencies seeking public comments

/0 Comments/in

SSGA staff have compiled a roundup of current news in the container transportation industry. Click the links below to view the original stories.

After meeting with truckers and marine terminal operators at the Port of New York and New Jersey, Federal Maritime Commission (FMC) Chairman Dan Maffei is warning ocean carriers to stop forcing shippers and drayage truckers to store their containers or pay a fee when they do so.

“The (FMC) has already been investigating reports of carriers charging per diem container charges even when the shipper or trucker cannot possibly return the container due to terminal congestion,” Maffei said. “I will ask that this investigation be broadened and intensified to cover instances where shippers and truckers are being forced to store containers or move them without proper compensation.”

Read more about the proposed fees here.

The FMC is seeking public comments on a new data collection regarding containerized vessel imports and exports as part of requirements established in the Ocean Shipping Reform Act.

The Act requires the FMC to collect and publish quarterly the total import and export tonnage and total loaded and empty 20-foot equivalent units (TEU) per vessel. The FMC’s proposal would collect tonnage and TEU information each month from ocean common carriers that transport 1,500 or more TEUS per month. Implementing this approach would collect at least 99% of all imported and exported containerized cargo. Interested parties can share their comments with the FMC for 60 days once the request is published in the Federal Register.

Read more here from the FMC.

The Surface Transportation Board is also seeking comments on its draft environmental impact statement regarding the potential Canadian Pacific and Kansas City Southern merger. The study concluded that train noise could be the largest environmental impact while other adverse impacts would be negligible, minor and/or temporary.

If approved, the merged rail company would make capital improvements including new or extended passing sidings, adding a section of double track and adding facility working track to 25 locations along the network.

Read more about the impact study and proposed merger here.

Other noteable transportation news:

Transportation Roundup: Unconventional peak season ahead

/0 Comments/in

SSGA staff have compiled a roundup of current news in the container transportation industry. Click the links below to view the original stories.

At Container xChange’s recent webinar, analysts discussed their predictions for an unconventional 2022 container shipping peak season, with massive inventory levels in warehouses as one culprit. One expert believes that issues in the container shipping market would continue even if there were no container shipments in the next six months. Read the full story recap here.

President Biden signed the Ocean Shipping Reform Act (OSRA) last month to expand the Federal Maritime Commission’s (FMC) authority to ensure a competitive and reliable international ocean transportation supply system. Requirements surrounding demurrage and detention charges, a hot topic among U.S. shippers, became effective upon the law passage on June 16. Read the full story here.

FMC Commissioner Carl Bentzel reported that the agency may need more staff to properly enforce the reforms from the OSRA. The OSRA increased funding to the FMC, but hiring enough staff will take time. Read more here.

In lighter news, here’s a story from Maritime Executive about the history of one of SSGA’s favorite topics: the shipping container.

Transportation Roundup: ‘Bringing a wooly mammoth back to life’

/0 Comments/in

SSGA staff have compiled a roundup of current news in the container transportation industry. Click the links below to view the original stories.

A prospective ship-to-rail container terminal on Oregon’s coast, the Pacific Coast Intermodal Port in Coos Bay, could help transform West Coast port infrastructure, but refurbishing and upgrading existing infrastructure would be like “bringing a wooly mammoth back to life,” according to Chad Meyer, president of NorthPoint Development. NorthPoint Development, the largest U.S. developer of warehouse and e-commerce fulfillment centers, applied for $1.4 billion in federal funding to invest in heavy infrastructure for container handling at the terminal. They received additional support after 13 members of Congress sent a letter to the White House in June. One hundred twenty miles of railroad owned by Coos Bay Rail Line would also need to be upgraded to get the terminal ready to handle containers. Existing Coos Bay terminals handle lumber and wood products, general cargo, liquid bulk shippers and fishing fleets. Read more about the project here.

Several SSGA members have reported very low availability of trucking equipment in the Upper Midwest, but in positive news, trucking employment numbers in the last three months are nearly double compared to the same time last year. A record 62,400 workers were added to payrolls in April, May and June. This could be in part due to independent drivers returning to work as spot rates decline, according the Journal of Commerce here.

Other positive news for container shipping shows that the post-COVID container demand boom may have run its course. Drewry’s post throughput index showed a decline in April, including a 25% decline at Shanghai. Because of the softening demand, some companies are now renegotiating shipping agreements that were made during the surge or taking advantage of lower rates on the spot market. Rates are spotty though, with shipping costs remaining high in areas of congestion, such as China to Chicago, and many are still reporting higher rates than those paid before the pandemic. Read more from the Wall Street Journal.

SSGA applauds Ocean Shipping Reform Act passage

/0 Comments/in ,

Relief is finally in sight for agricultural shippers, after President Biden signed the Ocean Shipping Reform Act of 2022 on Thursday.

The law will ensure a more competitive global ocean shipping industry and provide relief to U.S. exporters, including Specialty Soya and Grains Alliance (SSGA)-member agricultural exporters, who have struggled with significant supply chain disruptions over the past two years. It will also provide the Federal Maritime Commission (FMC) with new, additional enforcement authority 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.

“The Ocean Shipping Reform Act of 2022 gives the Federal Maritime Commission additional authority and tools to protect U.S. exporters from ocean carrier practices they determine to be unfair and illegal,” said Darwin Rader of Zeeland Farm Services, an SSGA board director and chair of the alliance’s competitive shipping action team. “Hopefully, the end result will be that U.S. ag exporters will have the opportunity to ship their goods to customers around the globe in a timely manner at a fair price.”

SSGA Chair Rob Prather, AgTC Executive Director Peter Friedmann and SSGA Executive Director Eric Wenberg

The House first passed a version of the bill in December, and the Senate passed its version by unanimous consent on March 31. Rather than reconcile the two bills by conference committee, the House opted to pass the Senate version. The U.S. House of Representatives overwhelmingly passed the Senate version of the bill, 369-42 on Monday, and the president signed it at a ceremony on Thursday at the White House.

SSGA appreciates the hard work of the bill’s sponsors, Sens. Amy Klobuchar (D-Minn.) and John Thune (R-S.D.), and Reps. John Garamendi (D-Calif.) and Dusty Johnson (R-S.D.) for their bipartisan efforts in getting through the bill that will support agricultural shippers.

“We applaud the work that’s been done so far,” SSGA Executive Director Eric Wenberg said. “We’ve used our expertise in intermodal shipping to inform and educate the debate and will continue to do so. With three of the four congressional sponsors being from South Dakota and Minnesota, we trust that the message is clear and that the final rule, when it emerges, will support agricultural shippers from the central United States.”

SSGA has long supported passage of the Ocean Shipping Reform Act and has worked since October 2020 to inform the general public about the supply chain crisis, working on behalf of its members who export high-quality, Identity Preserved and specialty 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 had “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 week, SSGA held its quarterly board meeting in Tacoma, Washington and attended the Agriculture Transportation Coalition’s (AgTC) annual meeting there. During the AgTC meeting, Klobuchar, in a video message, acknowledged SSGA, among others, for supporting the Ocean Shipping Reform Act and for championing ag exports.

SSGA also has great appreciation for AgTC and its efforts to help get the act to Congress.

The Ocean Shipping Reform Act will:

  • Require ocean carriers to certify that late fees — known as “detention and demurrage” charges— comply with federal regulations or face penalties;
  • Shift burden of proof regarding the reasonableness of “detention or demurrage” charges from the invoiced party to the ocean carrier;
  • Prohibit ocean carriers from unreasonably refusing cargo space accommodations for U.S. exports and from discriminating against U.S. exporters;
  • Require ocean common carriers to report to the FMC each calendar quarter on total import/export tonnage and 20-foot equivalent units (loaded/empty) per vessel that makes port in the United States;
  • Authorize the FMC to self-initiate investigations of ocean common carrier’s business practices and apply enforcement measures, as appropriate; and
  • Establish new authority for the FMC to register shipping exchanges.

“This new legislation is important and long overdue,” said SSGA board director Bob Sinner of SB&B Foods. “We’ve been waiting for this for many, many months. I am hopeful that the rulemaking that follows this legislation ensures that equipment gets where it’s needed. At the end of the day that’s what’s needed in rural America.”

Ocean Shipping Reform Act to become law

/0 Comments/in ,

Ag shippers from central U.S. in need of relief

More than 2 ½ years ago, the Specialty Soya and Grains Alliance was one of the first agricultural associations to sound the alarm on the crisis taking place in container shipping. Finally, some relief is in sight, as the Ocean Shipping Reform Act of 2022 is heading to President Biden’s desk. On Monday, U.S. House of Representatives overwhelmingly passed the Senate version of the bill, 369-42.

The House first passed a version of the bill in December, and the Senate passed its version by unanimous consent on March 31. Rather than reconcile the two bills by conference committee, the House opted to pass the Senate version.

SSGA acknowledges the bill’s sponsors, Sens. Amy Klobuchar (D-Minn.) and John Thune (R-S.D.), and Reps. John Garamendi (D-Calif.) and Dusty Johnson (R-S.D.) for their bipartisan efforts in getting through a bill that would provide the Federal Maritime Commission with new, additional enforcement authority. It also will 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.

“We applaud the work that’s been done so far,” SSGA Executive Director Eric Wenberg said. “We’ve used our expertise in intermodal shipping to inform and educate the debate and will continue to do so. With three of the four congressional sponsors being from South Dakota and Minnesota, we trust that the message is clear and that the final rule, when it emerges, will support agricultural shippers from the central United States.”

Once signed, the law also would provide 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.

On Tuesday, SSGA will hold its quarterly board meeting in Tacoma, Washington, prior to the annual meeting of the Agriculture Transportation Coalition’s annual meeting where senators and representatives who sponsored the Ocean Shipping Reform Act are scheduled to appear.

SSGA has long supported passage of the Ocean Shipping Reform Act and has worked since October 2020 to inform the general public about the supply chain crisis, working on behalf of its members who export high-quality, Identity Preserved and specialty 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,” according to 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.

Transportation Roundup: SSGA urges FMC funding increase

/0 Comments/in

SSGA staff have compiled a roundup of current news in the container transportation industry. Click the links below to view the original stories.

SSGA joined other several other agricultural organizations urging the U.S. House and Senate Transportation-HUD Appropriations Subcommittee to consider increasing fiscal year 2023 funding to the Federal Maritime Commission, up to the $38,260,000 authorization level included in the Ocean Shipping Reform Act. The letter preceded the House passage of the Ocean Shipping Reform Act, which is now headed to President Biden’s desk for approval. View the letter here.

The Journal of Commerce will analyze the rankings in its Top 100 Importers & Exporters report during a webcast on Thursday at 1 p.m. CST. With strong consumer spending, total containerized trade in and out of the U.S. rose 7.8 percent in 2021, with import gains in many segments, including automobiles and parts, household goods, toys, clothing, electronics and foodstuffs. JOC will analyze the changes in consumption and give a near-term outlook in the first of two-part web series. Register for free here.

BNSF Railway Company, CSX Transportation, Norfolk Southern Railway and Union Pacific Railroad must now submit additional information about their rail service recovery plans to the Surface Transportation Board (STB) after their initial submissions lacked the necessary level of detail. On May 6, the STB ordered the Class I railroads to submit service recovery plans to address service deficits. STB Chairman Martin Oberman said the plans “failed to instill confidence that the carriers have a serious approach to fixing a problem caused by their own lack of preparedness to respond to external shocks and fluctuations in demand, including especially short-sighted management of labor forces and other resources.” Read the full release here.