Exporting dairy products used to entail a relatively logical chain of events that involved getting an order, organizing the logistics, and having product reach the customer. That was it, according to Gabriel Sevilla.

“Today, that transaction has to be touched at least 20 times before it actually reaches the port or the end customer,” the dairy exporter contrasted on the May 18 Hoard’s Dairyman DairyLivestream.

The current shipping situation is unlike anything companies have experienced in 20 years, he described. Just like supply chain logistics are making it difficult to get necessary inputs to dairy farms, they’re also making it harder for those selling dairy products to move their orders.

Sevilla’s company, Proliant Dairy Ingredients, currently has a four-week lead time to get new logistics bookings, meaning they have to negotiate contracts at least six weeks out to ship product on time. Once the order is made and labeled correctly, a truck and chassis must be sourced to move the container of product.

“Finding containers in the Midwest today is very, very challenging, so in some cases that product has to be trucked to a nearby city or a port in order to find that container,” added Sevilla. Proliant’s processing plants are located in Michigan and Minnesota, and they ship about 500 containers and trucks per month. Moving containers from the coasts to more inland locations has become more difficult and costly for freight companies, so fewer are available for exporters like Proliant to use.

Congestion and labor shortages at railyards then make the next leg of the journey more difficult. Delays in that process create further problems of containers arriving at the ports to be loaded in time. Think of it like missing a connecting flight — one delay complicates every subsequent part of the trip.

Reroutes have become common, whether because ports are too backed up or there is a threat of a labor strike at the port or the rail. But these adjustments can still create problems elsewhere. “Everything that we do to reroute or be creative to get product to customers gets affected by any element that might affect this already-broken supply chain,” Sevilla said.

The common issue

Working on the front lines of these complications, Andrew Hwang is the manager of business development and international marketing at the Port of Oakland. His perspective is simple.

“I think the one main issue that we are all facing today is infrastructure,” Hwang said. “Infrastructure, almost by definition, is expensive and it takes a long time, so any projects that you would have or that you would need would’ve had to have been started many years ago.” He added that for years, federal dollars have funded East Coast ports at a 10-to-1 ratio when compared to West Coast ports. The current issues have been happening for years because of this but are exacerbated now with more backups and congestion stemming from the labor shortages of the pandemic.

Still, this is an issue affecting just about everyone worldwide. “This is a global phenomenon. This is not limited to the East Coast or the West Coast,” Hwang said. “Just getting your cargo onto a vessel doesn’t mean that you’re not going to see problems when that vessel arrives at the destination.”

To watch the recording of the May 18 DairyLivestream, go to the link above. The program recording is also available as an audio-only podcast on Spotify, Google Podcasts, Apple Podcasts, and downloadable from the Hoard’s Dairyman website.

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The next broadcast of DairyLivestream will be on Wednesday, June 15 at 11 a.m. CT. As of January 2022, we moved to a new system. If you have not yet, you will need to re-register to continue receiving email updates and links to the webcasts. You can sign up here now. Registering once will sign you up you for all future events.

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(c) Hoard's Dairyman Intel 2022
May 23, 2022
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