While supply chain woes continue across the United States, international shipping backups plague export efforts even as dairy products sold to the global market push toward 20% of all U.S. dairy sales.
During the October 27 Hoard’s Dairyman DairyLivestream sponsored by Cargill, panelists addressed the shipping difficulties and how larger transportation fees are being split across producers and purchasers.
“I know that this is a big topic, and it’s an important and challenging one,” commented Vikki Nickolson-West, who serves as the senior vice president of global ingredients marketing for the U.S. Dairy Export Council. “I know that on the export side, our U.S. dairy processors and traders are working tirelessly with their customers – either splitting the costs or being creative.”
While the extremes of COVID-19 shipping delays have certainly presented some new challenges, transportation woes aren’t a particularly new concern for dairy producers and processors.
“Transportation is just the friction in the system,” explained the University of Wisconsin-Madison’s Mark Stephenson. “Sometimes transportation is an almost neglectable portion of the cost, and today it’s very much in the headlines.
“A lot of the transportation – but not all of it – that we’re discussing is the trans-oceanic transportation or shipping,” Stephenson continued. “The big part of the cost in that is not actually sending the product across an ocean, it’s the cost of getting containers loaded on ships, through ports, and off ships.”
In this regard, the shipping challenges are not unique to the United States. Nearly every country that is active in the export market is dealing with similar challenges. In the United States, exporters are actually fortunate that many of the products leaving our ports do so at a more affordable rate than those coming to our shores.
John Brubaker, who operates Knott Run Dairy in Idaho, explained that in his area of the country, two-thirds of the transportation expenses occur from Idaho to the port city.
“Once it’s there, it’s a timing issue of actually getting it on a ship and getting it to where it needs to be,” he said. “The timing issue right now is getting our products there in time and not 60 days late. That’s the big issue.”
Unfortunately, experts are not anticipating any immediate relief in transportation challenges or backups. Instead, the creativity and cooperation that have allowed exports to continue and even grow during the last two years will remain necessary to take advantage of this very important U.S. dairy market.
To watch the recording of the October 27 DairyLivestream, go to the link above. The program recording is now also available as an audio-only podcast on Apple Podcasts, Spotify, Google Podcasts, and downloadable from the Hoard’s Dairyman website.
An ongoing series of events
The next broadcast of DairyLivestream will be on Wednesday, November 17 at 11 a.m. CDT. Each episode is designed for panelists to answer over 30 minutes of audience questions. If you haven’t joined a DairyLivestream broadcast yet, register here for free. Registering once registers you for all future events.
