September 26, 2023

In this aerial view taken from a drone, shipping containers sit on a dock in the Port of Oakland on March 9, 2021 in Oakland, California.

Justin Sullivan | Getty Images

From July to December last year, major ports on the east and west coasts of the United States rejected potential agricultural exports of at least $ 1.3 billion, according to a CNBC analysis.

The rejections were particularly severe in December. This resulted from an analysis of the data compiled by the Census Bureau and the ports of Los Angeles and Long Beach in California and the port of New York in New Jersey.

The estimated total value of lost export trade from the three ports for December was at least $ 257.5 million. The Port of New York and New Jersey recorded the highest volume of export denials for 2020 in December.

The export decisions of shipping companies in these ports are being investigated by the Federal Maritime Commission. The commissioners are investigating whether this refusal to trade violates the 1984 Shipping Act. This investigation comes at a time when China’s exports are hitting records. The full-year trade surplus reached $ 535 billion, the highest since 2015.

One of the most important legal obligations of the Shipping Act is the non-discriminatory regulatory procedure of the carriers for the movement of goods on the water. Shipping companies have preferred to send empty containers back to China in order to fill the boxes quickly and transport them on the more lucrative China-US route.

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According to the Freightos Baltic Index, airlines charge USD 5,548 per container to the east coast and USD 4,571 to the west coast. US agricultural export containers take longer to process because the product needs to be unloaded and the container needs to be cleaned. The US to China route is also a fraction of the price ($ 715 per container), so carriers can afford to return empties instead of containers full of agriculture.

“Carrier practices not only inflict significant financial damage on US exporters and importers, but are also extremely short-sighted,” said Peter Friedmann, executive director of the Agriculture Transportation Coalition. “These practices cause US exporters to lose overseas customers and create the conditions for shipping companies to lose significant business themselves in the future.”

In December, shippers rejected an estimated 72,508 containers, known as 20-foot equivalent units (TEUs), according to CNBC data analysis. This balance was calculated using the difference between the actual empty exports in 2020 and the share of empty exports in 2019. The difference corresponds to the amount of empty container exports that should have been filled in 2020.

From July to December a total of 370,505 TEU were denied from the ports of Los Angeles, Long Beach, New York and New Jersey with a container deficit of USD 1.3 billion.

To calculate the minimum value of potential trade loss as a result of rejection of agricultural exports, CNBC used the Port of Los Angeles Containerized Agricultural Export Price for Soybeans / Oilseeds / Grains found on the US Census, USA Trade online site. The value of this export is USD 3,552 per TEU. It is one of the low value exports.

China and Brazil

Starting in the new year, China traditionally buys from the USA’s largest soybean competitor, Brazil. Friedmann of the Agriculture Transportation Coalition says this rejection of trade can only offer Brazil more opportunities.

“Brazil expanded its soybean production during the trade war, and this trade refusal can only help them at the expense of the US farmer,” Friedmann said. “When carrier practices deny overseas customers affordable / reliable exports from US-Ag, they find alternative sources to US agriculture and simply do not return to their US sources.”

Friedmann said Asian buyers are frustrated. One of the largest buyers of soybeans in Asia is looking to move US soybean shipments from container to bulk, which can affect American jobs.

“The major Chinese animal feed importers of US soybeans are fed up with the practices, fees and reliable delivery of containers at sea,” said Friedmann. “Once these Chinese customers switch, they may never revert to the container model, which has an impact on jobs in the port. Container ships generate more man hours. This means far fewer containers to be loaded at our marine terminals, less work for dockers and in In the years to come, fewer containers will have to be transported on container ships. “

The decline in US exports can also be tracked in the global container trade data from local and global transportation and logistics research firm MDS Transmodal. China’s share of global exports rose in the third and fourth quarters of 2020. North America’s global export share, however, never recovered.

“The increase in world trade was mainly due to China, which not only retained the title of” Factory of the World “but also improved its position,” said Antonella Teodoro, Senior Consultant at MDST.

Other ports and next steps

The Northwest Seaport Alliance, the fourth largest container gateway in North America, made up of the Port of Seattle and the Port of Tacoma, tells CNBC that it has also suffered a major export loss. In 2019, the ports pulled out 913,332 containers with full exports. In 2020 this number fell to 790,620 containers.

“Our exporters are suffering,” said John Wolfe, CEO of the Northwest Seaport Alliance. “We have spoken with our terminal operators and operators about this issue, and there is more work to be done to address the extreme challenges facing our export community.”

CNBC sent its results to FMC Commissioner Louis Sola.

“I can safely say that some airlines have reduced their exports in exchange for empties (mainly the European lines), while others have made a conscious effort to make up for the slack and increase their exports in 2020 (mainly the Asian lines). ” said Sola. “I find that the most interesting and justify the need for further discussion.”

Sola said he is also eyeing the potential impact on jobs.

“This claim needs to be verified. We support our longshore employees. So I have tried to draw attention to the loss of work caused by the suspension of cruises to our cruise ports across the country and to advocate the safe resumption of the cruise ,” he said.

The imbalance in trade has resulted in American exporters writing many letters asking for intervention from the Federal Maritime Commission. Letters from politicians were also sent on both sides of the corridor. FMC Commissioner Rebecca Dye is currently leading an investigation into the airline’s actions in an investigation into Fact Finding 29.

The investigation was approved in March 2020 and expanded in November to include container returns and container availability for U.S. export goods, as well as storage and late fees that carriers charge exporters.

“No official has a trade deficit unless it is the other’s deficit,” said Sola. “America is best served when we deliver more products than we deliver.”