AgTC’s virtual annual conference hails FMC’s Rebecca Dye

The Agriculture Transportation Coalition (AgTC) accorded Federal Maritime Commissioner Rebecca Dye its “Person of the Year” award for her work implementing new demurrage and detention rules that help shippers and U.S. agricultural exporters.

The announcement was made during AgTC’s first virtual conference by Executive Director Peter Friedmann

In response, Dye told AgTC participants, “I couldn’t have done it without you.”

In her comments to AgTC members, Dye said, “The freight delivery system is the backbone of the U.S. economy” and commended the contribution of AgTC and its members.

Dye also stated that the FMC will continue to be vigilant on behalf of shippers and exporters to maintain the integrity of new demurrage and detention rules.

Covid-19 Impacts

She also emphasized the importance of incentives and collaboration in order to maintain the flow of goods especially during the Covid-19 crisis.

In a March 31st, press release the Federal Maritime Commission noted a new role for Dye addressing Covid-19 impacts:

“The Federal Maritime Commission today issued an order authorizing Commissioner Rebecca Dye to identify operational solutions to cargo delivery system challenges related to Coronavirus-19.

The Order notes that “Recent global events have only highlighted the economic urgency of responsive port and terminal operations to the effectiveness of the United States international freight delivery system … Accordingly, the Commission has determined there is a compelling need to convene new Supply Chain Innovation Teams to address these challenges.”

In addition to authorizing Commissioner Dye as the Investigating Officer for “Fact Finding No. 29 International Ocean Transportation Supply Chain Engagement”, the Order allows her to form one or more FMC Supply Chain Innovation Teams to support the efforts.

“The United States depends on reliable international ocean freight delivery to support the economic security of our country. The maritime supply chain extends upstream and downstream from the ports and closely located logistics centers to American exporters and importers and keeping the system functioning is a priority of national importance. This initiative is an effort by the Commission to do everything we can to eliminate pressing problems in the freight delivery system,” said Commissioner Dye.

Commissioner Dye will engage key executives to participate on the Innovation Teams. These industry leaders will represent all facets of the ocean cargo system including public port authorities, marine terminal operators, beneficial cargo owners, ocean transportation intermediaries, liner shipping companies, drayage trucking companies, longshore labor representatives, rail officials, and chassis providers.

Commissioner Dye will commence her work by interviewing port directors to determine what steps they can identify to mitigate critical supply chain challenges.

“Small and medium-sized shippers are especially affected by a lack of cargo storage space and are running out of options of where to send shipments once offloaded and I applaud this contribution. The Northwest Seaport Alliance has identified sites in their complex that can be used to stage cargo and containers off terminals. I applaud their initiative. We are calling on everyone engaged in moving ocean cargo to do what they can in this effort,” said Commissioner Dye.”

Dye expressed the hope that the ocean freight system will soon be seeing a rebound “when the economy comes roaring back.”

ONE

Jeremy Nixon, chief executive officer for liner shipping company Ocean Network Express (ONE) based in Singapore, told participants that April’s volume for the carrier was down by 20% compared to 2019 and that predictions after July are “difficult.” The imbalance in imports and exports is creating a shortage of containers in the United States. The imbalance continues to be a challenge.

Nixon noted that ONE is dedicated to providing the best support during the crisis and this is supported by greater digitization in its operations, better customer service including electronic responses to questions as well as telephone responses to continue to provide customers with personalized service.

During the Covid-19 outbreak in China, Nixon noted that ONE provided a vessel to store refrigerated containers at the Port of Shanghai until refrigerated container capacity at terminals service was brought back to normal.

In supported of enhancing its reefer capability, ONE recently announced “expansion of its refrigerated container (reefer) fleet by adding new 5000 (40’ HC) units, including 200 units equipped with advanced Controlled Atmosphere (CA) technology, which slows down the respiration and ripening process to maximize the shelf life of fruits and vegetables.”

Nixon noted that there remain issues in supplying 20-foot unit containers.

He urged AgTC members to “Please bear with us” during the economic downturn.

Wine and Spirits Shippers Association

Alison Leavitt, managing director, Wine and Spirits Shippers Association based in Portland, Maine, noted that sales of tequila have been brisk in grocery stores even though bars have been shut during pandemic restrictions.

She noted that the Wine and Spirits Shippers Association ships 85,000 TEUs per year and had recently concluded contracts with ocean carriers just as the Covid-19 lockdowns went into effect.

Up until that point, the focus had been on concerns for ocean freight hikes related to the new IMO low Sulphur fuel rules.

Instead, there has been a “free fall’ in oil prices related to the global economic downturn.

Leavitt urged that carriers “listen to us, think long term and be flexible… We need to work together.”

Johnsonville Food Production Exports

Rachal DeRosier is a global accounts logistics specialist at Johnsonville Food Production, Sheboygan Falls, Wisconsin. DeRosier said that Johnsonville Food Production exports of frozen and chilled sausage and meat products are sold in Canada, Japan, Korea and elsewhere.

In March Johnsonville’s frozen and chilled container exports rose by 140%.

However, DeRosier noted “capacity shortages” in Chicago required increased trucking of export containers to West Coast ports such as the Port of Oakland, California.

DeRosier told participants that, in some cases, non-time sensitive container exports are being shipped to East and Gulf coast ports for eventual shipment to Asia.

West Coast Versus East Coast

DeRosier explained that Johnsonville was taking this slow delivery route as a result of the “slow down at West Coast ports” that occurred five years ago.

In response to her comments, Peter Friedmann noted, “There is not now a slow down at West Coast ports. I realize that shippers have a long memory” and the DeRosier’s reference to a slow down by West Coast ports refers to what happened back in 2015.

Friedmann has emphasized to AJOT that West Coast ports offer faster sailing times to China, Japan and Korea that benefit “time sensitive cargo such as beef, pork and poultry…In China, chicken feet are very popular and so we are seeing a lot of chicken feet…These protein products are major markets for us in China and must transit the most direct route in order for us to maximize profitability. Those exports are best shipped through the U.S. West Coast ports including the Ports of Los Angeles, Long Beach, Oakland, Seattle and Tacoma. If these exports were diverted to East or Gulf Coast Ports, the transit times for chilled products would increase, forcing the products to be shipped as frozen instead of chilled, which lowers the market value in Asian markets. As an example, a container of chilled beef or pork might ship at $190,000 in value but when it goes frozen that value goes down to $50,000.”

During the Covid-19 emergency AgTC has held regular conference calls with West Coast port directors creating opportunities for shippers to discuss problems directly with port directors to expedite issue resolution.

At the same time, Friedmann has worked to improve relations with the International Longshore and Warehouse Union (ILWU) leadership including inviting union officials to AgTC conferences. The result is that ILWU officials heard directly from farmers and exporters about the hardship the 2014-2015 work slowdown at West Coast ports caused to sales and livelihoods.