Agriculture exporters shouldn’t have trouble finding ocean container capacity this year or next, nor will they have any trouble finding buyers. U.S. agriculture exports in fiscal 2013 are expected to hit $142 billion, $6.2 billion more than the year prior, according to the U.S. Department of Agriculture.
“We are expecting a moderate recovery in exports, particularly considering how hard corn was hit last year,” USDA Chief Economist Joseph Glauber said.
Rising crop prices have accounted for much of the increase in export value in the last 10 years, but agriculture prices in general have flattened this year as supply expands. That means the USDA’s expectations for rising exports by value also should translate to higher volumes needing to be shipped.
The biggest ramp-up in agriculture volume looks to be for corn, exports of which are expected to jump 73 percent to 1.3 billion bushels between early September and the end of August 2014, rebounding from the lowest levels since the early 1970s, Glauber said. Brazil unseated the U.S. as the top corn exporter in the year ending Sept. 30, 2012. But he expects the U.S. to regain its export title because of more moderate Midwest weather and increased yield, even as ethanol production erodes the country’s corn export capacity.
Wheat exports are expected to dip 9.8 percent to 925 million bushels, while soybean exports are forecast to expand 7.4 percent to 1.45 billion bushels, according to the USDA’s World Agriculture Supply and Estimates report. The growth in soybean demand comes as global protein consumption is expected to rise 2.7 percent in 2013-14, with China driving about a third of the increased consumption.
The USDA expects beef exports to slip this year and next, despite Japan’s recent easing of its import restrictions on the meat. The USDA anticipates pork exports will drop 6.6 percent year-over-year this year, before expanding 4.5 percent in 2014, as more U.S. farmers take to raising pigs and demand increases. Poultry exports, including turkey and broiler meats, likely will stay flat this year and then rise 4.5 percent to 8.5 billion pounds in 2014.
Shippers should have plenty of refrigerated export capacity on container vessels for the foreseeable future as carriers utilize larger ships that used to ply the Asia-Europe trade, said Bob Weiss, independent administrator for the Food Shippers Association of North America. Aside from a largely unsuccessful general rate increase and a dubious congestion surcharge in January, rates have stayed “fairly steady,” he said.
Still, demand for refrigerated exports this year isn’t expected to be as robust as it was in 2012. Weakened European demand is the main culprit, said Bill Duggan, Maersk Line’s vice president of refrigerated services in North America. Exported reefer container volume was flat in 2012, after jumping 13.8 percent between 2011 and 2010, according to PIERS data.
Most of the domestic perishables customers of Choptank Transport, a Preston, Md.-based third-party logistics company, expect moderate growth this year, said Steve Covey, vice president of business development. “A lot of these (food and beverage) companies look to be having a great year,” he said.
Behind the scenes, however, more shippers are moving toward the transactional market from fixed contracts, he said. Improved technology, more competition for loads and finicky customer demand makes spot pricing more attractive to small and midsize shippers. Approximately 60 percent of Choptank’s shipper customers do business on a transactional basis, while the remaining stick with contracts, a reversal from five years ago. Even produce farmers are increasingly choosing to cut out the middlemen and contract out transportation themselves. “As the size of their operations have grown,” Covey said, “they want better margins.”