USDA announces Port of Oakland partnership, but no quick relief to congestion |

USDA announces Port of Oakland partnership, but no quick relief to congestion

Agriculture Secretary Tom Vilsack on Monday, Jan. 31, announced a partnership between USDA and the Port of Oakland to increase capacity at the port and improve service for shippers of U.S.-grown agricultural commodities that have experienced export difficulties amid COVID-19.

But it was clear from statements by Vilsack and others that there will be no relief until March and that many of the export problems that agricultural producers are facing won’t be resolved in the short term.

USDA and the Port of Oakland are partnering to set up a new 25-acre “pop-up” site to make it easier for agricultural companies to fill empty shipping containers with commodities. 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. As a result, many of these carriers have suspended service to the Port of Oakland, USDA noted.

“COVID-19 revealed vulnerabilities across our supply system, both at our ports and in the agricultural sector,” Vilsack said in an early morning news release. “As the economy has made an historic recovery, it has put additional strain on the supply chain. The Biden-Harris administration is using creative approaches to improve port operations while elevating American-grown food and fiber. 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.”

“This creative partnership with USDA and the Port of Oakland will help American farmers and agricultural producers move their product to market while also making better use of empty containers that are causing congestion at the ports,” added Transportation Secretary Pete Buttigieg. “After we helped set up inland pop-up ports at the Port of Savannah, we witnessed significant improvements in the flow of goods, and we expect to see similarly positive results once this Oakland facility is open. We look forward to engaging with other ports on similar solutions to congestion.”

“This is an important step that shows the value of players in the supply chain coming together to identify challenges as well as potential solutions,” said California Department of Food and Agriculture Secretary Karen Ross. “I wish to thank the USDA for making this investment. It will help improve access to overseas markets for California agriculture producers at a critical time of year for exports of high-value specialty crops.”

Andrew Hwang, manager of business development and international marketing for the Port of Oakland, said he is “excited” about the relationship with USDA and that the port is also developing a freight intelligence system and working with the U.S. Army Corps of Engineers to widen the port’s turning basin.

Vilsack said the Port of Oakland will provide the site and that the USDA will use Commodity Credit Corporation funds to pay for 60% of the cost of the startup, which will also have a dedicated gate with the ability to pre-cool refrigerated shipping containers to receive perishable commodities, all while avoiding bottlenecks that would have resulted from entering the main area of the port. USDA will also provide $125 per container to cover “additional movement logistics.”

The site should make it easier to export California items such as nuts, dairy products, rice and wine, which have experienced some of the worst problems in finding a way to Asia. Industry, federal and state officials have said that, while the industry is experiencing short-term losses, the bigger fear is that the United States will develop a reputation as an unreliable supplier and lose markets they have worked hard to develop.

“The delays and disruptions in export shipping have cost the U.S. dairy industry well over $1.3 billion through just the first three quarters of 2021 – to say nothing of the rest of America’s agricultural sector. Solving this problem simply cannot wait any longer, and today’s announcement of the close collaboration between our associations, the Port of Oakland and USDA is one key step in the right direction,” National Milk Producers Federation President and CEO Jim Mulhern said in a news release.

“Our biggest concern is our customers look for reliability and supply,” Mike Durkin, president and CEO of Leprino Foods, said during the webinar. But Durkin added he believes officials at the Port of Oakland “are trying to think creatively.”

The core problem is that the demand for imported products is so great that ships are returning to Asia without loading the agriculture products they have usually taken on their return trips. But in a webinar sponsored by NMPF and the U.S. Dairy Export Council, Krysta Harden, CEO of the council, noted that most of the headlines about the port situation are about American consumers not being able to get the products they want in a timely manner, rather than the problems of exporters, and she asked how awareness about the importance of exports could be raised.

Vilsack replied that it is important to make sure that the relationship of exports to jobs “is underscored.” He also said it is important to “build a sense of trust in the trading relationship we have with other countries.” People hear so many negative stories about trade that it is also important to rebuild trust by talking about the enforcement of trade agreements, he added.

Rep. John Garamendi, D-Calif., noted that none of the top five shipping companies are American and that China, Taiwan and Korea are major owners of shipping companies. He asked whether the administration is putting pressure on those countries to treat U.S. product fairly. John Pocari, the White House supply chain envoy, reported that the State Department had been working on the issue, but Garamendi said that the percentage of carriers going back to Asia empty has grown from 40% to 70%.

His constituents are struggling, Garamendi said, and will find it difficult to wait until March.

Garamendi and Rep. Dusty Johnson, R-S.D., authors of the House-passed Ocean Shipping Reform Act, said the Senate needs to take it up and the Senate version needs to be as strong as the House.

The problem is the carriers do not understand reciprocity and need to be told that if they bring in containers of goods they need to leave with American goods, Johnson said. “There ought to be a law, and by God we are going to get a law,” Johnson said.

Johnson said he is excited about the “pop-ups” in Oakland and other places, but “we do need regulatory reform” and said their bill gives the Federal Maritime Commission more authority.

The dry peas and lentils industry just told him that 30% to 40% of their shipments have been canceled, Johnson added.

Jaime Castaneda of NMPF and USDEC pointed out that the carriers are only part of the problem and that trucking and warehousing have their own problems.

Jon Eisen, director of the Intermodal Motor Carriers Conference for the American Trucking Association, said the industry was short 60,000 truckers but that the number has risen to 80,000 during the pandemic.

Eisen also said that there is a shortage of chassis, the special trailers or attachments that allow ocean containers to be transported via truck. A tariff on Chinese chassis means it also harder to buy them, Eisen added.

International Dairy Foods Association President and CEO Michael Dykes said in a news release, “On behalf of the businesses throughout the dairy supply chain, IDFA is pleased to see the Biden administration committing federal resources toward new solutions for prioritizing the export of U.S. dairy and other agricultural goods along the West Coast, where acute supply chain challenges are hampering American competitiveness.” He noted that IDFA recently announced a Dairy Exports Working Group with the Port of Los Angeles and shipping company CMA CGM to identify and address similar supply chain issues hindering U.S. dairy product exports.

American Farm Bureau Federation President Zippy Duvall said, “Supply chain issues are a big concern for farmers and ranchers, and we appreciate USDA’s actions to ease congestion at several ports. Today’s announcement about increasing capacity at the Port of Oakland, our third largest port for containerized waterborne agricultural products, is welcome news. It’s an important step to ensure America’s farmers and ranchers have a reliable path for exporting the rice, beef, pork, fruits, vegetables, almonds and many other agricultural goods grown in the United States.

“Further steps must be taken to prevent carriers from sending empty containers out of U.S. ports, such as the passage and signing of the Ocean Shipping Reform Act.”

USDEC and NMPF also noted that House members sent a letter last week to President Biden, urging him to use all his powers to address agricultural supply chain issues.


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