Kicking-off Agri Peak Season, Kansas City Style
Whether or not we want to admit it, the leaves have begun to fall, the heat is subsiding and a new season is upon us. I’m painfully aware that in just a couple of weeks, I’ll be bidding my flip flops and paddle board adieu, bringing out the sweaters and having pumpkin-spiced-everything. Even though I don’t love the days getting shorter, Fall does have some great things going for it: FOOTBALL (have you seen these new Alabama freshmen??), fire pits, Thanksgiving, AND the Midwest agricultural harvest!
Two weeks ago I traveled to Kansas City to meet up with NYSHEX agri members, commodity traders and growers at the 2018 U.S. Soy Global Trade Exchange & Midwest Specialty Grains Conference. This event always kicks off the harvest season for grain, feed, oil seeds, soybeans and corn. Organized by the US Soybean Export Council and the Midwest Shippers Association, the event attracts hundreds of agricultural product buyers from all over the world. In fact, there are so many international buyers that the conference is translated live into multiple languages. Buyers fly to Kansas City to negotiate large export deals with agri exporters. Tens of thousands of tons of soy, grain, corn and beans will be exported as a result of this event.
A Strong Harvest:
All the projections from the USDA and economists throughout the conference signaled that the US would be blessed with a strong harvest this year. However, when it comes to how US export volumes will compare with past years, there is a lot of uncertainty due to pricing and sourcing shifts brought on by trade tariffs.
We can validate this. In an informal survey of our US export agri members, we heard an overwhelming belief that the harvest would be one of the best in recent memory, but where all of the product ends up and at what price is a little murky. It could be as simple as supply/demand. Foreign based buyers are betting that a strong growing season will ultimately lead to lower prices.
A New Layer of U.S. Container Logistics Challenges Exists:
One of the highlights of the event for me, was a panel comprised of agricultural exporters speaking to the challenges of US container logistics; specifically those related to inland transport. Interestingly, all three shippers highlighted the same three challenges:
- Insufficient trucking capacity caused by ELD (electronic logging devices), HOS (hours of service) regulations, port and road congestion, and a shortage of drivers were all signaled as major barriers – and with no light at the end of this tunnel. Despite the concerted effort over the last year to increase driver wages and encourage alternative transport solutions such as increased use of rail, US exporters will continue to struggle on the roads.
- The second challenge named was steamship line consolidation and cost cutting. One of the panelists spoke to the difficulty in adjusting to the reduction from 17 Transpacific carriers to 10 in just two years. These consolidations equate to fewer options, more transshipment points, and insufficient headcount in documentation and customer service centers to assist when issues arise.
- The third shared pain point was not surprising: trade tariffs. From a shipper perspective, there is so much uncertainty now as to how long the tariffs will last and whether it makes sense to sell, or just store product at today’s commodity price levels. From a carrier point of view, the reduced flow of export volumes to China may mean that ocean carriers will end up with their equipment in Southeast Asia and other destinations where it is not needed for head-haul freight. The concern of the panelists and session participants is the possibility that ocean carriers may choose to ship more containers to China empty from the U.S., rather than carry already low-margin agricultural exports to Southeast Asia and other markets.
What This All Means for our Members:
The complexities (and often headaches) of global trade abound, but that doesn’t stop the Midwest agricultural industry. Spending time with many of our agri export members, I heard time and again that they have come to trust NYSHEX to provide them with space and equipment guarantees throughout the year, and especially during harvest season.
The good news is that this year, our six carrier members – Maersk Line, OOCL, HMM, Hapag Lloyd, CMA-CGM and COSCO – will have a wide-range of Westbound Transpacific service offerings on the exchange for the agri OND peak season to move these strong volumes. Agri exporters are rightfully proud of the work that they do to feed the world and NYSHEX loves being a part of that mission!
If you are an agri exporter who hasn’t joined NYSHEX, what are you waiting for?
Ask one of your industry peers how they’re using the exchange and join today for free.
You can buy freight for the last week of December, today!
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