IDFA, LA port, French company to collaborate on supply chain issues
PALM DESERT, Calif. — The International Dairy Foods Association, the Port of Los Angeles, and CMA CGM, a French shipping and logistics announced here Monday the formation of a Dairy Exports Working Group aimed at identifying and addressing supply chain issues hampering U.S. dairy product exports.
The announcement was made at the Dairy Forum, the annual IDFA conference, by Gene Serota, executive director of the Port of Los Angeles, and Michael Dykes, president and CEO of IDFA.
The group will focus on seaports on the West Coast of the United States, where a majority of dairy products leave the country as well as opportunities to streamline the movement of products from the interior of the United States to the West Coast.
The dairy industry and other U.S. agriculture sectors have been complaining that vessels from Asia, particularly China, have been rushing back to Asia to reload without the usual shipments of U.S. farm products.
“U.S. dairy exports reached a near-record $6.4 billion in 2020 and continued to set a blazing pace in 2021 due to surging global demand, but the U.S. dairy industry could be exporting much more to destinations around the world if there was more reliability and predictability in the supply chain,” Dykes said in a news release.
“Our IDFA members are pleased to collaborate with the Port of Los Angeles and the CMA CGM Group in this Dairy Exports Working Group on potential market-based solutions to clearing bottlenecks at our West Coast ports and land and rail systems. This type of collaboration is essential to avoid significant future disruptions to the U.S. dairy supply chain that will result if exports continue to languish.”
In a speech to the Dairy Forum, Serota said “the empty container is the center of conversations” and that the CMA CGM Group had promised to offer a larger percentage of empty containers to U.S. exporters in an attempt to increase exports.
Serorta said the Dairy Exports Working Group will examine several ocean shipping and rail challenges and solutions, including:
▪ Exploring ways to aggregate and streamline U.S. dairy exports from multiple suppliers to ensure more consolidated and attractive bookings;
▪ Working to increase rail availability in the interior of the United States to reach non-coastal exporters;
▪ Determining viability of implementing a “fast lane” concept for vessels agreeing to depart full or with fewer empty cargo containers;
▪ Defining agreed terms for exporters using empty containers currently languishing at U.S. ports; and
▪ Establishing guarantees to fix and surpass ghost bookings.
“American dairy exporters have been hard hit by supply chain challenges and trade policy that have made it difficult to get their goods to global markets,” Serota said in the news release.
“I’m pleased to collaborate with our dairy industry partners and the CMA CGM Group to launch this working group and find solutions that will benefit not only the dairy industry but all American exporters. We look forward to others joining this important initiative.”
Ed Aldridge, president of CMA CGM and APL North America, stated, “At CMA CGM, we are committed to supporting America’s farmers and taking bold actions to ensure they get their goods to market in a timely manner. With the Dairy Exports Working Group, we will have all the right players in the room. This collaborative partnership will enable us to quickly implement innovative solutions designed to not only help the dairy industry with current supply chain challenges, but also to pave the way for the future.”
“I am hopeful that the formation of the Dairy Exports Working Group begins a new period of collaboration among dairy processors, ports, and shipping companies to find market-based solutions for the supply chain challenges impacting U.S. dairy exporters,” said David Ahlem, president of Hilmar Cheese Company and chair of the IDFA Executive Council.
IDFA added that the lack of predictability and reliability is costing U.S. dairy companies millions of dollars and damaging the credibility and reputation of U.S. dairy exporters among global customers. IDFA said dairy exporters have been forced to airfreight product more than ever before, sometimes at 20 times the cost, to meet overseas contracts.
At the same time, U.S. warehouses are full or facing near capacity levels due to delays.
IDFA said its supply chain task force is led by IDFA Vice President of Trade Policy and International Affairs Becky Rasdall and Director of Legislative Affairs Donald Grady.
In his speech, Serota noted that he met with President Biden on Oct. 13 and said, “The great thing about working with this administration is that they understand convening powers.” He also noted that the Biden administration and the administration of California Gov. Gavin Newsom, who, like Biden is a Democrat, are coordinated in their approach.
Serota also praised the appointment of former Deputy Transportation Secretary John Porcari as port envoy to assist the administration’s Supply Chain Disruptions Task Force and to help industry stakeholders address structural inefficiencies that are bottling up ocean shipments.
Serota said he told Biden trade policy needs to be addressed, including the phase one trade deal with China.
“We have to create a national export policy to get farmers and manufacturers back in the game,” he said.
Serota acknowledged that the longshoremen union’s contract expires June 30, but said he expects the employers and the union to reach agreement on a new contract even if it is not by the expiration of the current contract. Noting that he takes no position in the negotiations, Serota said the longshoremen have not gone on strike since 1972 and that he does not expect a strike.
The longshoremen can see the money that the shippers are making, Serota said.
“I don’t believe they are out for blood, but they want a piece of the action,” he added, noting there is a question of how the union will respond to automation and robotacization in the port.
The feeling at the federal and state levels is that if the private companies want to be part of the solution, they need to step up, Serota said. He said he hopes the companies will come “to the table rather than get hit with a sledgehammer.”
Asked whether European ports have the advantage of more central administration, Serota said there “must be consistency” among the ports.
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