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Peter Friedmann, executive director of the Agriculture Transportation Coalition, describes the “transportation crisis” that exporters are facing today, as they struggle to secure containers for their shipments to Asia.
Carriers, ports and shippers all agree that both the import and export trades are “dysfunctional right now,” says Friedmann. Import freight rates are “sky-high,” even as carriers are struggling to maintain schedule integrity and imposing punishing detention and demurrage charges. But agriculture exporters are especially feeling the pain. The problem is a lack of availability of containers in which to get product to market. To a great extent, Friedmann says, ocean carriers would rather send an empty container back to Asia, where it can be loaded with high-value consumer goods, than make that box available to the American exporter of a lower-value commodity. For carriers, it’s too expensive to chase down containers at inland locations; they prefer to turn them around at the port for rapid reloading with Asian imports.
Ironically, part of the problem is that carriers are offering export shippers rates that are too low to justify handling their goods. Many exporters would be willing to pay more if that meant guaranteed access to equipment, Friedmann says — but they can’t afford the $6,000 to $12,000 that importers now pay to move a container of branded athletic gear or consumer electronics. By contrast, agriculture exports consist almost entirely of commodities that can be substituted for product from elsewhere in the world. Margins are so thin that an excessively high freight rate can bar a U.S. exporter from international markets entirely.
Relief can come in two forms, Friedmann says: the market, and action by the Federal Maritime Commission to enforce guidelines on the proper application of detention and demurrage charges.
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