America's ports are a portal to customers around the world.
Since the onset of the pandemic, those ports have been receiving inbound goods like a vein carrying blood to the human heart but then trickling outbound goods like a clogged artery in need of emergency coronary bypass surgery. This subpar port function has cost America’s dairy farmers and processors over $1.3 billion in lost sales and higher transportation costs in the first three quarters of last year alone. While USDA’s pilot project to ease congestion at the Port of Oakland is a step forward, it will take years of rehabilitation to remedy our sputtering ports.
Like most crises, export shipping woes did not evolve overnight. The early stages of the health pandemic took a toll on both domestic trucking and outbound shipping capacity. After consumers began to emerge from their COVID-19 cocoons, customers had pent up purchasing needs and more buying power due to federal stimulus packages.
Countries aspiring to reach lush American consumer markets began loading ships at breakneck speed. Demand grew so quickly that western U.S. ports could not unload containers fast enough. As ships backed up for weeks and then months awaiting a dock, shipping companies determined it made more financial sense to return to Asia empty rather than to wait for U.S. cargo. That decision was made easier because outbound containers have been fetching only 10% to 25% of the shipping rates paid from Asian exporters.
Besides shouldering the blame for ports not functioning properly, there’s the matter that the U.S. does not have a major domestic-owned shipping carrier within its borders. That makes us beholden to other countries, which is a sad state of affairs given America emerged from World War II with both the world’s mightiest Navy and the best shipping fleet.
These and many other factors have led to the shipping quagmire that has tormented perishable agricultural products that must have dependable shipping schedules. In an attempt to turn the tide, USDA and the Department of Transportation announced a pilot project at the Port of Oakland in late January. It creates a 25-acre pop-up site to provide space for containers carrying agricultural goods and 60% of the funding for the startup costs. It’s one step forward.
This effort to ease port congestion, along with projects by the U.S. Dairy Export Council, the National Milk Producers Federation, and the International Dairy Foods Association, will provide additional relief. However, ports will be a problem for many years to come. As this situation persists, dairy’s reputation will be tested as a reliable sales partner.