Agricultural trade suffers from port delays | Business

The lingering effects of the COVID-19 shock on global trade have resulted in a backlog of container ships awaiting unloading outside the west coast’s most critical shipping ports. Persistent congestion and related logistical hurdles threaten the ability of U.S. farmers and ranchers to meet much-appreciated increases in foreign demand.

Imports declined sharply in the first few months of COVID-19, but began to increase again in the summer of 2020 and did not stop. Reflecting the relaxation of many restrictions related to the pandemic, consumers with cash on hand entered 2021 with the desire to spend on a variety of goods and services. Fueled by near-record personal savings rates and stimulus checks, retail consumption of goods is above traditional levels of the first and second quarters. Total US imports for the first quarter of 2021 were up $ 138 billion from the first quarter of 2020. Typically, in the first half of the year, shipping lines and seaports prepare for business increases that occur in the second and third quarters. These are months of increased consumption driven by the holiday season and back-to-school shopping.

Los Angeles and its sister port of Long Beach are America’s two busiest ports. Combined with Oakland, these three California seaports are the primary ports for containerized trade with Asian markets. Demand from a country full of energy and pent-up money has pushed the three ports to record import levels over the past year. Container imports in the first quarter of 2021 were up 39% from year-over-year values.

The crushing of imports was difficult for all three ports. Backlogs of anchored container ships, which could normally be counted on one hand, reached as high as 40 in February at the ports of Los Angeles and Long Beach. The number of anchored ships has since declined to the lowest 20 and teens, but still presents a major bottleneck for the movement of cargo. The Port of Los Angeles reported a 6.1-day wait period for unloading and mooring space during the last week of May 2021; it is usually during the day at most. Staff constraints in trucking terminals contribute to the lengthening of unloading times.

The California seaports of Los Angeles, Oakland and Long Beach are also important export terminals. On the export side, these ports have also been extremely busy. Container exports for the first quarter of 2021 were up 36% from year-over-year values. Los Angeles, Oakland and Long Beach are the first, second and third ports, respectively, for containerized US agricultural exports by water to the United States.

The increase in imports and exports caused considerable congestion both on the water side and on land as ports filled with additional containers. In order to avoid traffic jams and get containers back to Asia in general and China in particular as quickly as possible so that they can be filled with more import goods, there has been an increase in empty container shipments. from these three ports. Some find it more efficient to ship empty containers rather than waiting for export goods to be loaded, which has resulted in a significant decrease in the number of containers available to agricultural exporters.

At California’s three major ports, empty containers in the first quarter of 2021 fell from an average of 1.16 million 20-foot equivalent units in the first quarter of 2018-2020 to 1.81 million 20-foot equivalent units, or an increase of 56%. Compared to the first quarter of 2020 alone, the first quarter of 2021 represents an 80% increase in empty export container units. Accessibility to export containers was further limited by record shipping costs and damaging surcharges. With these factors combined, the ability of farmers and ranchers to fulfill supervision contracts has been significantly affected – with some estimates nearly $ 1.5 billion in lost agricultural exports.

The ports of Los Angeles, Oakland and Long Beach are important for agricultural exports in general, but they are particularly vital for certain agricultural products. California ports support well over or about 50 percent of all US exports of many agricultural products. For example, 75 percent or more of US exports of processed nuts, oranges and tomatoes are exported from the combined region of Los Angeles, Oakland and Long Beach. Over 60 percent of US exports of cotton and hides and skins; about 50 percent of American meat and wine; and 30 percent of US dairy ships from California ports. Between 2016 and 2020, annual US exports from California ports of these products alone averaged nearly $ 22 billion.

Increased foreign demand for U.S. agricultural products is exacerbating the need for container access and logistics solutions to Western port delays. In addition, the seasonal nature of some agricultural products makes the resolution of port delays critical. For example, oranges and cotton are traditionally exported at higher rates between January and May, while edible nuts peak between October and December. They have all been particularly under pressure from port delays since October 2020. Obstacles in the ability of sellers to meet their foreign obligations limit expectations of future income and emphasize relationships between foreign partners.

With generally positive growth signs across all markets, a container ship bottleneck persists in Western ports as a COVID-19-induced barrier to much needed revenue relief. Persistent delays at some of the most profitable seaports for American agricultural products threaten the bottom line of farmers and ranchers who rely on foreign outlets to sell their products. These heavy setbacks have further implications for commodities dependent on seasonal export demand in the affected months. In an era of relatively tight supply and inflated prices, the orderly flow of goods and services is essential for continued recovery from supply chain shocks associated with the pandemic.

Veronica Nigh is an economist and Daniel Munch is an associate economist at the Market Intel of the American Farm Bureau Federation. Visit www.fb.org/market-intel for more information.

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