Farmers Have A Big Problem On Their Hands: They Can't Find A Way To Ship Their Harvest
Cargo ships are unloading containers in the U.S. and immediately shipping them out, empty, to Asia. That's frustrating American farmers and exporters who are struggling to get products overseas.
Bob Sinner, a specialty soybean producer in North Dakota, has a major problem on his hands: He has plenty of beans, but he's struggling to ship them to his customers overseas, and his deliveries are running at least a month and a half behind schedule.
"We've had customers in Asia that have had to stop their operations waiting for supply," Sinner says. "Our farmers need to get their storage facilities emptied because we have a new crop that's coming in September, October. We have to get this product moving."
The same cargo traffic jams that have frustrated American importers are also plaguing exporters.
Shippers are delivering record volumes of back-to-school supplies and fall fashions from Asia to the West Coast. Typically, those containers travel to North Dakota or other points in the middle of the country to be filled with U.S. exports.
But today, instead of carrying soybeans and other American products back across the Pacific as usual, many of the containers are going back empty as shippers rush to bring in even more imports.
That has Sinner and other exporters across the country simmering in frustration.
"The trade continues to be a one-way street," says Gene Seroka, executive director of the Port of Los Angeles, the nation's busiest cargo port. "We're handling a lot of imports, not enough exports, and there are way too many empties going back."
Why cargo economics don't favor farmers and exporters
Ordinarily, about two-thirds of the containers leaving U.S. ports are filled with exports. Today, more than three-quarters of the containers leaving Los Angeles are empty.
And while the port has been handling record volumes of imports this year, exports in June were the lowest since 2005.
The economics right now are stacked against Sinner and other exporters.
Thanks to soaring demand in this country, cargo ships can charge more than seven times as much to bring a container from Asia to the U.S. as they can for the return trip. According to S&P Global Platts, that price difference has widened sharply since the pandemic.
As a result, it's often more lucrative for shipping companies to race back to Asia with empty containers for a quick refill, rather than wait for those containers to be loaded with American exports.
Traffic jams in U.S. railyards and truck terminals have also substantially lengthened the time it takes to move cargo between the center of the country and the coasts, which has added to exporters' disadvantage.
"That's the challenge," said Peter Friedmann, executive director of the Agriculture Transportation Coalition. "The ocean carriers do not want to spend the time picking up our export cargo."
Agricultural exports are typically less valuable than what importers are bringing in. That means exporters are akin to budget travelers trying to compete with first-class passengers for the attention of an airline.
"We're not a high-dollar commodity," said Alexis Jacobson, who manages exports for an Oregon company that sells straw to customers in Japan and South Korea. "We have to ship at the lowest freight, or we can't make the shipment."
Shippers say relief is around the corner, but it's still bad
Farmers and other exporters have complained to the Federal Maritime Commission and to members of Congress. But shipping companies insist neither regulation nor legislation is the answer.
"The much-welcomed economic recovery is resulting in record import volumes and is putting pressure not just on ocean carriers but on every link in the complex global and North American supply chain," John Butler, president of the World Shipping Council, told lawmakers last month.
Carriers argue that transportation bottlenecks in both directions will ease once consumer demand in the U.S. returns to more normal levels.
But in North Dakota, Sinner is getting impatient. For months now, he's been assured by shipping experts that relief is around the corner, only to be disappointed.
"Now they're saying this could be better by the end of the year. Who the hell knows?" Sinner said. "And let's be honest. We're not the only store in town. Our customers have choices. And if we can't deliver at an efficient and reliable way, they're going to look for other sources for their products."
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