Agriculture products exporters face headwinds

https://www.agtrans.com
Author picture

Peter Friedmann

Perhaps at no time since the inception of the Agriculture Transportation Coalition 28 years ago have circumstances conspired to create so many challenges for the U.S. agriculture and forest products exporters, and many importers.

Some of the challenges have been created by various participants in the international supply chain, and can be corrected by them, if they are so inclined. Others are beyond the control of anyone.

Let’s start the latter because they are fundamental to knowing the volumes of U.S. exports over the coming year and should be a primary concern to port authorities, ocean carriers, railroads, truckers and all service providers, as well as the actual cargo interests represented by the AgTC.

We start with the high price of the U.S. dollar relative to other currencies. The higher priced the dollar, the less competitive our U.S. exports are with those of other countries that can supply the same agriculture and forest products to our customers. Also, the higher priced the dollar, the more expensive our goods are for our foreign customers, impacting the volume they will buy from us.

The mantra of the AgTC is worth repeating: “There is nothing that we produce in this country in agriculture and forest products that cannot be sourced somewhere else in the world. If we cannot deliver affordably and dependably, our customers will go elsewhere.”

This happened in the West Coast port shutdown in 2002, and again when the West Coast ports suffered slowdowns in 2014-2015 as a result of dockworker contract negotiations. Our West Coast ports have still not recovered. In some cases, we are in a new normal, but in the Pacific Northwest and Northern California, no one finds the status quo in terms of terminal wait times, both outside and inside the terminals, acceptable.

Another significant headwind facing U.S. agriculture and forest products exporters is the slowing economies of China and Japan, two of our largest international markets. More than any other aspect, these macroeconomic indicators will continue to determine the volume of U.S. agriculture and forest products exports.

Let’s address the pieces of the international supply chain puzzle that we, or at least some components of the private sector and government, can actually impact and improve.

  • Continued inability of critical West Coast gateway ports to handle current export and import cargo volumes and the larger vessels.
  • Increased cost of trucking operations because of federal and state regulatory mandates, including hours-of-service limitations, the most stringent truck weight limits in the world, driver age restrictions, emissions standards such as the California Air Resource Board standards mandates, driver recruitment challenges, Teamsters organizing, state of California Attorney General efforts to change the owner-operator model, and treatment of the drivers once they get in the terminals.
  • Many West Coast marine terminals continue to be characterized by unacceptable delays and wait times. Efforts to expand gate hours, and to make programs such as PierPass and the proposed OAKPASS viable, remain challenged by lack of transparency and terminals’ unwillingness to truly partner with the cargo interests that will pay the fee, and the truckers who will determine the effectiveness of any terminal gate hour program.
  • The SOLAS container weight certification program goes into effect July 2016, imposing obligations on the shipper to certify the weight of the cargo and the container. If the carrier is not able to obtain the certificate in time, a container cannot be loaded onto a ship. Cargo bookings will roll and piles of containers stacked at the terminals will increase congestion. For cargo that is loaded just shortly before being sent to the terminals, transmittal of documentation in a timely manner is a challenge. AgTC and the Transpacific Stabilization Agreement have established a Container Weight Certification Working Committee. This committee is the means by which agriculture exporters, working closely with ocean carriers, will seek to ensure that the U.S. Coast Guard, the agency administering this program in the United States, understands how enforcement and administration of this law should be consistent with ocean shipping realities.
  • Customs and Border Protection continues its expansion into exports, an area in which it has far less experience and expertise than its traditional import role. Customs needs to understand that the programs it is considering, such as C-TPAT for exports, new advance documentation requirements, etc., can play can create severe barriers to U.S. exporters. We understand why Customs wants to monitor exports of dangerous goods so they do not fall into the hands of our nation's enemies and terrorists. But imposing regulatory restrictions on exports of agricultural commodities and forest products, which pose no danger, does great harm to the U.S. economy and, according several AgTC members, constitutes the greatest barrier to export of their products.
  • The AgTC will continue its outreach to all components of the supply chain. We will continue efforts already initiated with the International Longshore and Warehouse Union.
  • We will continue to work with other cargo stakeholders, through the Federal Maritime Commission if necessary, and directly with terminal operators if they are willing, to assure that there is a true partnership, because the current terminal environment in a number of ports is unsustainable.
  • The AgTC will press public port authorities to reassess their roles in their port operations. No longer is it acceptable for the port authorities to simply take a back seat as landlords. Ultimately, they are responsible to the taxpayers who expect them to step forward to ensure the ports are functioning as efficiently as possible.

The AgTC agenda for 2016 is ambitious but essential if U.S. agriculture and forest products will remain competitive in the global market.

Peter Friedmann is executive director of the Agriculture Transportation Coalition. Contact him at executivedirector@agtrans.org.