As the world’s largest agricultural exporter and looking ahead to a banner year in 2021, White House ports czar John Porcari says he’s “focused like a laser” on agricultural exports and knows that more can be done to move American agricultural products around the world.
As U.S. agricultural exports hit record highs, California ports saw a 9% drop in containerized agricultural shipments and $2.1 billion in lost sales, including a 15% drop at the Port of Long Beach, a drop down 18% at the Port of Los Angeles and a 34% drop at the Port of Oakland, historically one of the most important ports for agricultural exports.
Mike Durkin, CEO of Leprino Foods, which is the largest buyer of U.S. milk and the top dairy exporter to 55 countries, says more than 90% of his company’s orders were canceled or missed in 2021, up from 10% in a normal year. Over 100 orders rolled 17 times or up to five months. He is forced to airlift products just so customers don’t run out of products. And despite reports that the problems are beginning to resolve, Durkin says December was one of the worst months on record.
Why does this happen?
“It’s all about economy,” says Porcari. The price of filled exports returning to China is $650 to $1,000, while the price of imports returning is $4,300 to $13,600, which prevents the economy from encouraging ships to fill their boats of American exports.
Earlier in the week, the USDA and the Port of Oakland announced a short-term solution to help fill empty containers by creating a 25-acre pop-up site to load empty containers. Similar efforts helped clear backlogs in Georgia. But just because there’s a pop-up site to have agricultural containers ready to go, will that actually work to get some reciprocity for US agricultural exports?
Related: USDA Offers Solution to Ease Port Disruptions
Rep. Dusty Johnson, R.D., says pop-up staging zones and investments through the bipartisan Infrastructure, Investment and Jobs Act will be exciting if it works. But he says regulatory reform is what is needed to force shipping lines to act fairly.
John and Rep. John Garamendi, D-California, introduced the Ocean Shipping Reform Act to the House, which was overwhelmingly passed in December by the entire House by a vote of 364 to 60. Reports indicate that Sen. Amy Klobuchar, D-Minn., and Sen. John Thune, RS.D., are working on a companion bill in the Senate, but nothing formal has been introduced.
Garamendi says he’s worked on shipping issues for 12 years and says now is the time to force shipping carriers to play by the rules if they want to ship in and out of US ports. “Bottom line: not everything you do will solve the problem.” The issue is ocean reciprocity and the need for a two-way lane for incoming and outgoing products. “The economy drives the shipping lines until there is a law against doing so,” he adds.
Johnson explains that the interests of ocean carriers, only 2% of which are US-flagged, are not well aligned with the interests of US shippers. OSRA requires reciprocity, creates minimum service standards and gives the Federal Maritime Commission the tools to enforce the law.
Related: Shipping Reform Bill Sails To Pass
Porcari says it’s clear from the current data that agricultural exports are at a disadvantage right now. “This is unacceptable.” Shippers could benefit from more transparent data from shipping carriers, which are also part of OSRA.
Durkin says OSRA provides an opportunity to try to address the significant shipping imbalance. “We know carriers make a lot of money.”
OSRA has broad support, including from the International Dairy Foods Association, of which Durkin is also a member. He explains that both short-term and long-term solutions are needed, which will bring reliability that will trickle back to the farm. “We need to see an impact in the next six to 12 months. I feel like we are starting to gain ground. I think some things can be done nationally,” Durkin said.
Related: Shipping Reform Bill Seeks to Turn the Tide
Ultimately, COVID-19 hit, creating a backlog as America’s infrastructure was already facing its own challenges. “Suddenly solving this problem overnight was not going to happen,” Durkin says. However, he thinks short-term actions with the carriers and this administration as well as long-term reform offer hope.
Actors in the agricultural sector have expressed their concerns and asked for solutions. Porcari says players in the agricultural export sector are “outperforming their weight” and called on the agricultural industry to keep doing so to move the needle forward.
Johnson says the solution is simple. “Pass the OSRA. Pass the OSRA. Pass the OSRA.