Ag shippers: æDon’t kill golden gooseÆ
U.S. agricultural shippers meeting in San Francisco this week say they continue to face considerable challenges in getting containers and space on ships to move their cargo.
'These shortages continue to create serious inventory backlogs, and can mean failure to conform with buyer deadlines for delivering cargo,' said Peter Bourne, director of international transportation and rail operations for Tyson Foods, speaking to members of the Agriculture Transportation Coalition (AgTC) at their annual conferences.
'We are not sporadic shippers. We can fill and be counted on to fill ships,' he said, estimating that agriculture shippers create about 3 million TEUs of exports including meat and poultry, produce, hay, cotton, grain, wine and spirits, hides and leather, and forestry products.
At the same time Bourne said agriculture shippers recognized the problems of carriers that are estimated to have collectively lost $15 billion to $20 billion last year.
'All shippers recognize we must have a financial healthy carrier base or we will not have any long-term international supply chain,' he added. 'But there is a critical point for carriers to remember: don't kill the golden goose.'
Bourne noted U.S. ag companies must compete with growers or suppliers in other countries.
'For U.S. exports to flourish and grow and thereby providing carriers with a steady amount of business, we must have dependable, reliable service and consistent products. If we fail foreign buyers will source from other locations,' he said.
| Friedmann |
Peter Friedmann, executive director for the AgTC, said one frustration a number of shippers face has been carrier demands for additional rate increases just weeks after signing new service contracts.
Debbie McMillan, director of operations at Derco Foods, an exporter of dried fruits and nuts, and Erika Tarr, program manager for the Specialty Crop Trade Council that negotiates rates for about 150 similar companies, said this happened with one of the dozen steamship lines carriers they utilize.
The carrier asked the shippers to accept an increase of $60 for a 20-foot container and $75 per 40-foot container on top of what was agreed to in a service contract that went into effect April 1, saying 'unfortunately, without acceptance of any increase, cargo falls below guidelines, therefore, is considered 'non-loadable' cargo.'
Tarr said the group agreed to the increase, but was frustrated the increase came so quickly after signing a contract, especially as it had already incorporated a general rate increase that took effect April 15.
Friedmann supplied e-mails from other shippers saying they had run into similar situations with carriers.
Robert Sinner, president of SB&B Foods, a Casselton, N.D.-based shipper of identity-preserved soybeans, told AgTC members that '2010 has been much worse' for his company. Bookings by his company have been cancelled even by a carrier with which his firm had a 15-year relationship.
'There are many companies like ours,' he said. 'I'm just one of many that are screaming for containers.'
He said that in 2005 his firm was 'priced out of the market' by the railroad and forced to truck containers to and from Minneapolis, because Burlington Northern Santa Fe railroad said growth in new intermodal service would divert business from currently operating covered hopper services or 'shuttle car facilities.'
'We are running backwards, we are trucking east and railing west and this main intermodal service goes literally within 2,000 feet of our processing plant in North Dakota. So now we are trucking instead of 30 miles, 250 miles.
'Railroads and carriers are continuing to price both imports and exports much more attractively out of large metropolitan areas. That means it is cheaper to ship in and out of Chicago than Minneapolis. If this is allowed to continue, imports will slow into areas like Minneapolis, companies will exit, and rural economies will continue to deteriorate,' he said.
'We are a strong advocate that the Surface Transportation Board needs to be more involved with oversight authority on intermodal activity,' Sinner said. 'A lot of carriers have advocated all-water moves, they don't want to deal with the railroads. They want to drop the containers at the port and those of us in the Midwest are going to suffer.' ' Chris Dupin