Posts Tagged ‘agriculture exports’

Ag Shippers Air Concern at Meeting

April 21, 2021

Agriculture shippers expressed their concerns about rail service and other issues this week as part of a meeting sponsored by the U.S. Department of Agriculture and U.S. Department of Transportation.

Meeting participants discussed issues they are having shipping agricultural exports, as well as logistical and technical concerns.

Agriculture Secretary Tom Vilsack summarized those issues as placing stress on nearly every sector of the supply chain, including warehousing, trucking, rail service, inland and ocean terminals, container availability and vessel service.

Shippers described recent problems with ocean carriers as well as the emergence of detention and demurrage charges. Others recalled canceled or delayed bookings, as well as the difficulty in meeting export demands.

“While this disruption is impacting ports along the West Coast and the Gulf of Mexico, the ports of Los Angeles and Long Beach, the busiest container ports in the United States, moving nearly a third of containerized agricultural exports by volume, have experienced the worst disruption,” Visack said.

He said export challenges began in last fall and have escalated to include a wide range of affected commodities and port regions.

He said farmers who have struggled to find a market for their products and get a fair price for their commodities are finding markets opening back up.

Participating in the meeting were stakeholders in the livestock, grains, specialty crop and dairy industries, as well as representatives from the shipping companies.

USDOT officials discussed how they will work with the Federal Maritime and others to help address the shippers’ concerns.

Global Supply Chain Disruptions May Affect Railroads

March 17, 2021

International shipping is being hindered by container shortages, congestion at ports, high shipping prices and limited availability of dockworkers and truck drivers.

“‘I’ve never seen anything like this,’” Lars Mikael Jensen, head of Global Ocean Network at A.P. Moller-Maersk, the world’s largest shipping company, told The New York Times.

The news report said there has been a surge of orders from factories in China that is sent to North American in containers.

The orders are being driven by increased ecommerce in America.

That has resulted in containers accumulating at American ports and thus creating shortages of the boxes in Asia.

Other containers have been piling up unused in Africa and South America countries because shipping carriers have concentrated their vessels on their most popular routes, which link North America and Europe with Asia.

Pileups of containers also have occurred in Australia, New Zealand and India.

Shipping companies have reaped record-high freight prices with shipping company Maersk reporting more than $2.7 billion in pretax earnings in the last three months of 2020.

The situation has led to higher costs for transporting American grain and soybeans across the Pacific, which in turn is could increase food prices in Asia.

The container shortages might last through the end of the year, some industry observers said.

Railway Age reported that North American railroads could be affected by having grain shipments disrupted.

Jim Blaze, one of the magazine’s contributing editors, said that under normal circumstances containers are loaded with grain at such inland terminals as Chicago and Kansas City for export to Asia.

But ocean carriers are increasingly unloading containers of consumer goods at California ports and immediately returning the containers empty to Asia without loading them with grain or other American exports.

This has resulted in supply chain disruptions in some places although Blaze said the history of logistics is littered with such occasional disruptive trade patterns.

He said it is a matter of back haul economics in which some commodities are seen as more valuable than others and thus will be favored by shipping companies.

Hurt in these scenarios are back haul “filler” customer whose markets are disrupted in the head-haul direction.

“This is nothing new in the history of trade routes. Those risks should have been vetted in their business-case due diligence,” Blaze said.

Blaze believes global buyers at the delivery end of supply chains will act to re-balance their logistics costs and reliability,.

He said they will be do this by changing supply sourcing and transport hub (port and rail link) geography.

Similar measures were undertaken, for example, in response to labor strikes at West Coast ports about a decade ago.

Blaze said there may be longer term significant loss of market share for BNSF and Union Pacific to Norfolk Southern and CSX as more containers are routed to East Coast ports rather than West Coast ones.

He predicted that events of the past year during the COVID-19 pandemic are likely to accelerate the pace of this shift in maritime/rail container trade lanes.

Also likely to be affected are intermodal role players such as J.B.Hunt and Hub Group because many maritime smaller-cubic-capacity TEU (20-foot-equivalent unit) and FEU (40-foot-equivalent unit) containers are transloaded at ports such as Los Angeles and Long Beach to 53-foot domestic boxes for long-distance rail moves.

Shifting traffic patterns could mean fewer of these transload moves.

Industry Observers Speculate on How a Biden Administration Will Affect Freight Railroads

November 11, 2020

Railroad industry observers are already speculating as to how the Biden administration is expected to affect freight railroads and they see a few changes coming.

Joseph Biden, a former vice president and U.S. Senator from Delaware, is seen by many as likely to abandon the broad use of tariffs that had been favored by the Trump administration.

Those tariffs had drawn sharp criticism from many businesses and business trade organizations who said they caused economic disruptions because China responded with tariffs of its own that hindered exports of some U.S. goods and commodities.

In particular, U.S. agriculture exports were hurt by the tariffs. The railroad industry had opposed those tariffs because trade is related to 40 percent of rail shipments.

Statements issued by the Association of American Railroads have called for opening more markets to international trade and ending obstacles to sustained growth.

Biden during his campaign expressed support for two-person freight crews.

That will likely put him at odds with Class 1 railroads that are pushing to eliminate two-person crews on some trains in favor of a roving conductor who would handle multiple trains as needed.

Class 1 railroads also want to explore autonomous train operations.

During the Trump years, the Federal Railroad Administration said there was no data showing that two-person crews are inherently safer than one-person crews and therefore there was no need for a federal minimum crew size regulation.

It remains to be seen how a Biden appointed FRA administrator will respond to the crew size issue.

Another potential point of tension will be the two-person crew laws approved in some states at the behest of railroad labor union.

Courts have ruled that federal law in regards to crew size preempts state laws on the matter.

Ultimately, though, the crew size issue will be resolved in collective bargaining between the Class 1 railroads and labor unions, a process that may continue to drag on for a few more years.

Railroads will be keeping an eye on the Biden administration’s environmental policies.

Biden has said one of his first actions as president will be to have the United States rejoin the Paris climate accord.

He has called for ambitious targets to reduce the nation’s emissions of greenhouse gases that contribute to climate change.

In doing this, the Biden administration may favor policies that would have the effect of reducing the market for such energy-related commodities as utility coal and fracking sand used in oil and gas production.

However, if the Biden administration imposes policies that hinder pipeline construction that could boost the shipment of crude oil by rail.

A Biden administration might also seek repeal of regulations allowing the shipment of liquefied natural gas by rail.

The rail industry might be able to take advantage of a focus on the environment by claiming that it is a more environmentally friendly way to ship freight than trucks.