Agriculture Transportation Coalition

Agriculture Transportation Coalition

The low and declining dollar and Asia’s economic recovery is fueling huge export volumes. Foreign-sourced agricultural products are becoming less competitive, both in the U.S. and in U.S. export markets. Yet export ocean shipping capacity and container scarcity are limiting U.S. exporters’ ability to meet foreign demand.

The capacity challenges are growing. Many exporters believe the crisis this year will match and possibly surpass the crisis a couple years ago, when ocean transportation made the front pages of the general media, including the major cable news shows.

Now, as Congress desperately tries to increase employment, when exports are seen to be the way out of recession, export ocean capacity constraints threaten our nation’s economic recovery.

Ocean carriers have been clear: They allocate capacity based on import volumes and projections; as long as the recession restrains consumer spending, they will not add capacity. For two decades, carriers have focused primarily on imports, and justified service based on import freight revenue -- taking whatever exports as "gravy." This was not the case in the 1980s, when exports drove carriers' equipment and vessel allocation. Will we return to that export focus?

Carriers’ export freight revenue already is rising as demand rises and foreign customers can afford to pay more for U.S. exports. Export rates and surcharges are increasing rapidly. In some cases, export charges are approaching import freight charges. How high must they rise to induce the carriers to deploy some of their laid-up ships carrying U.S. exports.

Even in locations where import volumes (and containers) are significant, export demand is putting every container to use. Only Southern California reports available empty containers. Exporters are experiencing booking rejections and delays. Our members report:

-- “I’m experiencing vessels being overbooked, delayed and rolled without prior notice. I’ve had 5 containers in the last week moved to a later departure date without notification to us or our broker. I’m afraid our shipping season will be full of surprises and problems that we have not seen in years.”

-- “Equipment is okay right now because harvest has been painfully slow. In the next few weeks, container supplies will vanish. We know it, the steamship lines know it and our customers know it.”

This is no longer just an ocean shipping issue. Limited export shipping capacity threatens our nation’s economic recovery