The Department of Agriculture announced Monday plans to help fund a new 25-acre container yard at the Port of Oakland to try to help farmers get their rice, beef, pork, almonds, hay and other agricultural commodities into containers and onto ships.
USDA says the “pop-up” facility is part of its plan to reduce shipping problems that prevent ag exports.
“This partnership with the Port of Oakland builds on our aggressive approach to addressing challenges within the supply chain and sends a strong signal that we are committed to working across the Administration and with state, local and private partners to mitigate complex port capacity and congestion issues and to keep American agriculture on the move,” Agriculture Secretary Tom Vilsack said in a statement released Monday.
But a new container yard will not prevent vessel-operating common carriers – the large companies that own ships and containers – from canceling bookings for U.S. shipments of ag commodities and that’s often what is happening at West Coast ports in cities like Oakland, Long Beach and Los Angeles.
Some carriers are no longer servicing Oakland, and USDA says it recognizes the fact that the ship owners are refusing to accept containers with U.S. ag products.
“Fewer containers have been made available for U.S. agricultural commodities, as ocean carriers have circumvented traditional marketing channels and rushed containers back to be exported empty and as a result, many of these carriers have suspended service to the Port of Oakland,” USDA said in the Monday statement.
The Port of Oakland is particularly important to California’s wineries and rice farms, but often U.S.-bound ships are returning to China with empty containers rather than loading U.S. goods. Nearly all of California’s rice exports depart from Oakland.
“If we’re looking to book 50 containers, we might get 15,” Steve Vargas, senior vice president of Global Rice Trading, told Agri-Pulse in a recent interview.
California ports have been making concerted efforts to clear up congestion and relieve physical supply chain bottlenecks on the docks, but much of the problem for ag exporters is getting carriers to allow for space on the ships for containers full of Asia-bound commodities.
For every 10 containers that arrive from China to meet rising demand in the U.S., eight are sent back empty, according to a recent study by the Giannini Foundation of Agricultural Economics at the University of California.
“In September 2021, the fee for shipping a single 40-foot container (FEU) from Shanghai to Los Angeles was $12,000 versus $1,400 for the backhaul from Los Angeles to Shanghai,” the study said. “Due to the large difference in freight rates, shippers could not afford to wait for containers to be filled with agricultural goods stateside.”
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Legislation approved by the House in December seeks to prevent those containers from returning empty. The Ocean Shipping Reform Act, authored by Reps. John Garamendi, D-Calif., and Dusty Johnson, R-S.D., would tell carriers that they cannot “unreasonably decline export cargo bookings if such cargo can be loaded safely and timely and carried on a vessel scheduled for such cargo’s immediate destination."
A Senate version of the bill by Sens. Amy Klobuchar, D-Minn., and John Thune, R-S.D., is expected to be introduced soon.
Still, groups like the U.S. Meat Export Federation are showing their support for efforts to improve the situation at Oakland.
“We realize there is no magic solution to the shipping difficulties confronting exporters at U.S. ports, but improving access to containers is certainly a step in the right direction,” says USMEF President and CEO Dan Halstrom. “The Port of Oakland is an essential, strategic outlet for U.S. red meat exports, especially for chilled product destined for our key Asian markets, and our members look forward to utilizing the new container site.”
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