KANSAS CITY, MISSOURI, US — Port authorities were hopeful congestion that has plagued container loading and unloading facilities along the West Coast will diminish with the approach of summer. But there likely will be little time to fully recover more normal port operations before August, when import volumes, already at record levels, will begin to expand seasonally ahead of the winter holidays.
In the meantime, imports of containers loaded with consumer goods, including food and food ingredients grown or manufactured in Asian and Pacific nations, were delayed in reaching American importers for transport to markets across the United States, and exporters of American agricultural products complained that ocean carriers were slow to load or even refused to load US agricultural exports in order to expedite the return of empty containers to Asia to take advantage of the far more lucrative west-to-east trade.
The explosion in e-commerce purchases by American consumers in the last several months of the pandemic resulted in container volumes that overwhelmed workforces on the docks, in warehouses and on truck routes in between that have struggled with illnesses and absences because of the COVID-19 pandemic. It was expected these workforce problems will abate as more workers are vaccinated.
Some US ports have never been busier. The Port of Los Angeles, the largest container port in North America, was experiencing record volume. The port processed 799,315 containers, 20-foot equivalent units (TEUs), in February, a 47% jump compared with February 2020. It was the seventh consecutive month of year-over-year increases in volume and the strongest February in the port’s 114-year history.
“One year ago, global trade slowed to a crawl as the COVID-19 pandemic first hit China and then spread worldwide,” Gene Seroka, executive director, Port of Los Angeles, said in a March 16 press briefing. “Today, we are in the seventh month of an unparalleled import surge, driven by unprecedented demands by American consumers.”
Seroka noted in February 2021 loaded container imports at the Port of Los Angeles reached 412,884 TEUs, up 53% from 270,025 TEUs in February 2020. But loaded container exports totaled 101,208 TEUs, down 25% from 134,469 TEUs in February 2020.
At the same time, the dispatch of empty containers, heavily in demand in Asia, from the Port of Los Angeles surged 104% compared with February 2020, reaching 285,223 TEUs.
For importers, frustration and delays stem from the sheer number of container ships that must be unloaded and the time a container must wait on a dock tarmac or in a port warehouse before it is picked up for delivery to inland warehouses and points beyond.
Seroka in a March 30 interview with CNBC said, “The time it takes for the importer to pick up their cargo at the port is now more than four days, but it’s off its high of five days sitting under dwell.”
He reported some progress in other metrics as well.
“Truck times — the amount of time that it takes a trucker to move in and out of the port to drop off and pick up containers — has decreased to 77 minutes from 88 back in December,” Seroka said. “So, we’re starting to see some of the trending in the right direction.”
To accelerate improvement, Seroka emphasized the importance of getting the entire port workforce vaccinated.
“There are more than 100,000 folks who come to work here at the port complex every day,” he explained. “We’ve made significant strides (in vaccinating) with our dock workers and longshore members, but we still have a lot of work ahead of us with respect to truck drivers, warehouse workers and others.”
Seroka also said it was important for importers to pick up their cargoes as quickly as they can.
“We can then increase fluidity much more quickly,” he said. “Our tarmacs are about 90% full, and in our industry, 80% is considered full capacity.”
For agricultural product exporters, the greatest frustration in recent months has been the difficulty in securing containers, which increasingly have been shipped back across the Pacific empty.
In a recent interview with DC Velocity, Peter Friedmann, executive director, Agricultural Transportation Coalition, explained that ocean carriers consider the revenue they stand to receive on cargo shipped from Asia to the United States when deciding whether to have containers returned empty. Asian exporters of goods to the United States pay $6,000, $8,000, $10,000, and in some cases up to $14,000 in freight rates for a container going to the United States, Friedmann said.
“US agriculture exporters have to compete with producers from all over the world,” Friedmann continued. “We cannot afford to pay those kinds of freight rates. The value of the cargo in those export containers (agricultural cargoes destined for Asia) is not that high. Therefore, the export revenue that the ocean carriers get for carrying the cargo westbound to Asia is more like $400, $800, or maybe $1,400 to $2,000 on the high end. So, ocean carriers are making an economic decision to forgo carrying cargo outbound across the Pacific and instead are sending the containers back empty.”
US agricultural organizations and even members of Congress were pressing the Biden administration to ensure US agricultural shippers are treated fairly by ocean carriers.
In a Feb. 24 letter to President Joe Biden and copied to Secretary of Agriculture Tom Vilsack; Secretary of Transportation Peter Buttigieg; Michael Khouri, chairman of the Federal Maritime Commission (FMC), and Cecilia Rouse, chairwoman of the Council of Economic Advisers, the Agriculture Transportation Coalition and 70 other food and agriculture organizations, said, “According to their own public records, the ocean carriers are enjoying their most profitable period in decades by controlling capacity and charging unprecedented freight rates, imposing draconian fees on our exporters and importers, and frequently refusing to carry US agricultural products.”
The groups explained, “These refusals and charges by the ocean carriers dramatically increase costs to our exporters, marking foreign sales inefficient and uneconomical, rendering farmers and processors, for the first time, unreliable suppliers to the global supply chain.”
The groups asserted, “The Shipping Act provides the FMC with the authority to prohibit unreasonable, unjust practices and ‘to promote the growth and development of US exports through competitive and efficient ocean transportation.’ Given the urgency of this situation in commerce, we ask that these tools and any others available to our government be immediately applied to stem the current ocean carrier practices that are so damaging our agriculture exports.”
Roger Isom, president and chief executive officer, Western Agricultural Processors Association, who signed the letter addressed to the Biden administration, recently told Ag Net West, “There’s been movement from the Federal Maritime Commission. They’re definitely taking a deeper dive into investigating what the shipping companies are doing, but it’s very bureaucratic. They’re telling us it’s going to take weeks before any answers come back. We don’t have weeks. This thing has been going on for months.”