SAN FRANCISCO — Higher rates? Maybe, some ag shippers say.
Some exporters say they’d consider paying slightly higher rates if container lines could provide better reliability and service.
But those views weren’t universally shared among shippers who spoke during a panel discussion at the Agriculture Transportation Coalition’s 25th annual meeting in San Francisco.
“My opinion is that the market defines the rate. We’re not willing to pay more than the market is,” said Diogo Lobo, head of international logistics at JBS USA, which exports beef, pork and poultry products.
Monica Noyes, North American logistics manager at Cargill Cotton, and Sean Healy, supply chain manager at grain shipper Scoular Co., said they’d be willing to pay slightly higher rates in exchange for things such as improved reliability and equipment availability.
“I think people would pay if the service was really there,” said Lynette Keffer, CEO of J&K Fresh, an Inglewood, Calif., customs broker specializing in fresh produce. She said many carriers fall short on documentation, and that most still won’t accept a scanned bill of lading.
Time is money for produce shippers whose products might sell for $12 a case one day but only $7 the next, Keffer said. “If they can’t get it delivered on time, they’re losing $5 a case. Multiply that by hundreds of cases in multiple containers,” she said.
Greg Jackson, Asia business manager at Border Valley Trading, a hay exporter in Brawley, Calif., said that once a carrier accepts a booking, good service should be assumed.
Jackson noted that hay is low-value, rate-sensitive cargo, and said carriers contribute to volatility by announcing general rate increases and then canceling them. “Our industry needs stability. We need stable, long-term rates,” he said.
AgTC Executive Director Peter Friedmann, who posed the question about ag exporters’ willingness to accept higher rates, raised the possibility of differentiated rate-and-service levels between full-service carriers and “el cheapo” lines.
Lobo said service “is not a differentiator between the lines any more,” but he added that one reason may be the relative balance in container supply after the capacity squeeze that followed the 2008-2009 recession.
“If you had asked me this question two years ago, there would be a different response,” he said.