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Borderlands: Shipping container squeeze hits US soybean exporters

U.S. agriculture officials said the global shipping container squeeze is affecting soybean exporters. Pictured is a container ship near the Port of Los Angeles. (Photo: Jim Allen/FreightWaves)

Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: US agricultural exporters experiencing shipping container crunch; TForce Logistics expands last-mile delivery in Texas; Dachser expands operations in Arizona; and TexAmericas Center to expand rail service.

US agricultural exporters experiencing shipping container squeeze

During the first quarter of 2021, U.S. soybean exports reached the second-highest value ever recorded at $7.7 billion, nearly double the same period last year. 

The growth was driven by record first-quarter export volumes and higher prices, Mike Steenhoek, executive director of the Soy Transportation Coalition, told FreightWaves.

“This year has been really very strong; we’re up substantially over last year,” Steenhoek said. “Last year at this time we had only exported 37 million metric tons shipped. So far, we’re up to 57 million metric tons. So a substantial increase in exports over last year.”

The Des Moines, Iowa-based Soy Transportation Coalition is composed of 13 state soybean boards. It seeks to promote a transportation system that delivers cost-effective, reliable, competitive service for its members.

While soybeans and other U.S. commodities such as corn, citrus, poultry, pork and beef are experiencing stronger export volumes this year, Steenhoek said the global shipping container squeeze is affecting domestic agriculture exporters.

As of Thursday, the cost to move a loaded container from China to the U.S. West Coast had a spot rate of $6,542, according to the Freightos Baltic Index (FBXD.CNAW). The cost to move loaded containers from the U.S. West Coast back to China was $1,112 (FBXD.NAWC). 

U.S. agriculture exporters are being affected by global shipping container rates. Chart: FreightWaves SONAR (To learn more about FreightWaves SONAR, click here.)

“The container situation has affected us, though only about 7% to 8% of soybean exports occur by container. We’re still primarily a bulk exporter,” Steenhoek said. “It is certainly having an impact on bulk exports. Those soybean exporters who use containers, we have a supply chain that’s overly subscribed. It really isn’t just felt with containers, but also things like available slots on the vessels themselves.”

The U.S. Department of Agriculture’s quarterly agricultural trade forecast projects fiscal year 2021 U.S. farm exports to reach $164 billion — which would be the highest total on record. It would represent a 21% increase from the 2020 fiscal year’s total.

China is projected to be back on top as the No. 1 agricultural export customer at a record $35 billion, beating the previous record of $29.6 billion set in FY 2014. The growth is led by Chinese demand for soybeans and corn.

“China is by far our No. 1 customer for soybeans, and they do account for a significant percentage of what we have sent abroad,” Steenhoek said. 

The U.S. sent $26.5 billion in agricultural exports to China during 2020, including $14.1 billion in soybeans. 

Canada was the second-largest importer of U.S. agricultural commodities in 2020, accounting for $22.1 billion, including $2.1 billion in soybeans. Mexico was third, at $18.4 billion, including $2.7 billion in soybeans.

Steenhoek said most soybean farmers are in the Midwest. Once soybean crops are ready to ship, exporters send them either to the ports in the Pacific Northwest or the Port of New Orleans.

“About 61% of our soybean exports leave from export terminals on the Lower Mississippi River,” Steenhoek said. “The No. 2 export region is the Pacific Northwest, near Portland, Oregon, or Seattle, Washington. That accounts for about 25% of our exports.”

Steenhoek expects the supply chain issues for exporters to continue for the foreseeable future, including the container squeeze and rail availability, as well as the nationwide shortage of truck drivers.

“Every link in our supply chain is under stress right now. It’s certainly impacting those who export soybeans by containers, by not being able to fulfill customer demands,” Steenhoek said. 

TForce Logistics expands last-mile delivery in Texas

TForce Logistics (NYSE: TSX) recently launched its Texas regional e-commerce network, aiming to provide expanded, next-day delivery for the state’s largest metro areas.

Under the regional “mini-network,” Dallas becomes the central entry point for Texas-bound parcel and package shipments.

From Dallas, shipments are trucked to Houston, San Antonio and Austin for next-day delivery. Dallas-destined shipments will be next-day deliveries.

“Our new regional e-commerce network mirrors our proven strategy to provide regional deliveries with national coverage,” Dean Mills, TForce Logistics vice president of sales for North America, said in a statement.

TForce Logistics operates four e-commerce distribution and fulfillment centers across Texas. The sites serve as receiving centers for inbound “delivery-ready” shipments that are cross-docked into last-mile operations.

TForce’s Texas operation dispatches over 500 drivers daily, delivering everything from auto parts to manufacturers to orders for home delivery of goods such as apparel, footwear, health and beauty, nonperishable foods, home accessories, and electronics.

TForce Logistics is a unit of TFI International Inc. (NYSE: TFII). TForce operates 75 locations across the U.S. and Canada and has more than 6,000 employees.

Dachser expands operations in Arizona

Dachser USA Air & Sea Logistics recently expanded its facility in Phoenix in response to increased demand from cross-border and West Coast clients, officials said.

The expanded Phoenix operation includes 7,500 square feet of office space with capacity for more growth to support regional logistics opportunities. 

Dachser USA’s expansion in Phoenix “positions the company to manage increased volume from cross-border trade with Mexico, including shipments from manufacturing plants that assemble products in Mexico and for the U.S.,” Vincent Touya, managing director, said in a statement. 

Dachser USA Air & Sea Logistics is a unit of Kempten, Germany-based Dachser Group, which offers transport logistics, warehousing, and customer-specific services in maritime and road solutions. The company has 31,000 employees at 393 locations around the globe.

TexAmericas Center receives federal grant to expand rail service

The U.S. Department of Commerce’s Department of Economic Development (EDA) recently awarded a grant to the TexAmericas Center to build a new railroad facility in New Boston, Texas.

The $864,550 grant will also allow the TexAmericas Center to refurbish an existing railroad facility at the site. The investment is expected to create 157 jobs, retain five jobs and generate $250,000 in private investment.

“With the nationwide shortage of truck drivers, more shippers are likely to see rail transport as a viable alternative to truck transport, so this EDA grant is for this projected rail demand,” Scott Norton, CEO and executive director of the TexAmericas Center, said in a statement. 

Located in northeast Texas, the TexAmericas Center owns and operates a 12,000-acre park, with 3.5 million square feet of industrial space, servicing Arkansas, Louisiana, Oklahoma and Texas. 

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One Comment

  1. Brian Watt

    Back in 2009, I was living in the Illinois River Valley … beautiful country with a rich history of international trading and agricultural interests. Along the Illinois River in modern times, one sees major grain terminals operated by ADM, Continental Grain, and the like. These operations were set up and are set up to take advantage of the cheap river barge transportation available because of the Mississippi River system. For years, and still today, these shipments occur regularly, with their destination being NOLA, and bulk vessel operations to foreign buyers.

    A few years ago, let’s say 1999, someone hit on the idea of selling 20 and 40 foot bulk container shipments to buyers overseas. Specifically, Asian buyers of bulk corn and soybeans. Great concept! Many Asian buyers of American agri-product preferred American product due to quality. Many Asian buyers did not have the facilities to purchase large bulk quantities of grain for their livestock. So the container fit the bill.

    The SSLs were happy to provide the units for loading because the incremental revenue suited them. Walmart already was paying the container bill round trip. So long as the system wasn’t in hyperdrive, the SSLs were content to let the agribusiness thrive.

    In 2009, some friends of mine and I determined to find out the prevailing price for a 20 foot unit of agriproduct from the Illinois River Valley to Shanghai PRC. Since I lived in the origin region, I followed and recorded a 20 foot unit loading at ADM in Ottawa IL. I relayed that unit number to a cohort who worked in export operations for a SSL. That cohort could cross match my unit number with the Hyundai OBL. We relayed that OBL # to a friend of mine in Texas, who could imitate a beautiful Indian accent. This cohort then contacted Hyundai on the ruse that overseas operations was conducting an audit, and would that Hyundai counterpart please verify the invoice amount on this container. The amount turned out to be $ 935.00 USD.

    The upshot of all this? A SSL can’t possibly move a 20 foot container from Ottawa IL to Shanghai PRC (or any other Chinese port) for $ 935.00 USD after paying for US dray and US rail from Illinois to LAX. Significant cross-subsidy comes into the economics here. Furthermore, considering how these units are loaded, they become a logistics headache for the SSL given “how” ship must be physically loaded to account for these containers overweight status.

    My guess is that SSLs pared off this traffic due to lack of adequate revenue return versus the import traffic. It’s cheaper to return the empties to China rather than wait for American exports to fill vessel slots. American exports are being subsidized by the higher revenue imports. And, frankly, the Chinese own the equipment. So, as a matter of balance of trade, the Chinese can dictate to the Americans how much we buy from them, and how much they buy from us.

    Game. Set. Match.

Comments are closed.

Noi Mahoney

Noi Mahoney is a Texas-based journalist who covers cross-border trade, logistics and supply chains for FreightWaves. He graduated from the University of Texas at Austin with a degree in English in 1998. Mahoney has more than 20 years experience as a journalist, working for newspapers in Florida, Maryland and Texas. Contact [email protected]