One constant in this industry is change, but I have never seen circumstances change as fast as we did in the last quarter of 2008. Ships running at 64 percent of capacity, ships being parked and oil costs falling by $100 per barrel since July - these three issues are affecting ocean shipping worldwide.
I believe in a level playing field. The U.S. exporter can compete and win in the global marketplace. U.S. soybeans compete daily against Brazilian soybeans; U.S. cotton competes against Australian cotton, etc. U.S. exports help drive the U.S. economy. We have seen exports grow annually since 1960 except for three years: 1982, 2001 and 2002.
At the end of the third quarter of 2008, export values dropped by more than $12 billion versus previous months.
Early December rates from Los Angeles-Long Beach to key export markets in Asia were as low as $500 all-inclusive per FEU, lower than we have seen in years, but rates are down worldwide.
I am very concerned that U.S. exporters are being hurt by the numerous charges they already pay or will be soon when using LA-Long Beach: a $100-per-FEU PierPass charge, a $39-per-FEU Alameda Corridor charge, the looming $70-per-FEU clean-trucks charge, the proposed infrastructure fee which the ports say, will most likely average $15 per TEU.
Every one of these add-on charges added to the delivered cost of U.S. goods makes U.S. goods less competitive worldwide. I have no doubt that these charges are costing U.S. exporters potential sales. Using 2007 export statistics, these new charges would have equated to approximately $141 million on containerized grain shipments alone.
The U.S. has always had a superior transportation system, built for safety, speed and dependability. The rest of the world is catching up quickly. The U.S. exporter will be forced to compete on price alone now more than ever.
Port security and the environment are important to all Americans, but we must come up with alternative revenue streams to fund infrastructure and environmental improvements or one day this export nation may wake up with no exports.