Crunch at ports may mean crisis for American farms

It’s just 60 miles from El Dorado Dairy in Ontario, California, to the nation’s largest container port in Los Angeles. But the farm is having little luck getting its products onto a ship headed for the foreign markets that are crucial to its business.

The farm is part of one of the nation’s largest cooperatives, California Dairies Inc., which typically ships 50 million pounds of its milk powder and butter out of ports each month. But roughly 60% of the company’s bookings on outbound vessels have been cancelled or deferred in recent months, resulting in about $45 million in missed revenue per month.

“This is not just a problem; it’s not just an inconvenience; it’s catastrophic,” said Brad Anderson, CEO of California Dairies.

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A supply chain crisis for imports has grabbed national headlines and attracted the attention of the Biden administration.

Yet another crisis is also unfolding for American farm exports.

The same congestion at USports and shortage of truck drivers that has brought the flow of some goods to a halt has also left farmers struggling to get their cargo abroad and fulfill contracts before food supplies go bad.

Ships now take weeks, rather than days, to unload at the ports, and backed-up shippers are so desperate to return to Asia to pick up more goods that they often leave the United States with empty containers rather than wait for American farmers to fill them up.

The National Milk Producers Federation estimates that shipping disruptions have cost the U.S. dairy industry nearly $1 billion in the first half of the year in terms of higher shipping and inventory costs, lost export volume and price deterioration.

Part of the problem is that shipping companies are able to charge far more to ferry goods from Asia to the United States than vice versa, so they don’t want to waste time waiting for a less lucrative load departing from the West Coast.

According to data from Freightos, an online freight marketplace, the cost to ship a 40-foot container from Asia to the U.S. West Coast soared to $18,730 in November — more than 17 times what it cost to make the reverse trip.

As a result, more than 80% of the 434,000 20-foot containers exported out of the Port of Los Angeles in September were empty — up from about two-thirds in September 2020 and September 2019.