Logistic Bottlenecks challenge tree nut and fresh fruit industries
Refrigerated container imbalance for ocean shipments and port congestion will continue to present new hurdles for the upcoming export season, according to a recent report from Rabobank. David Magaña, vice president and senior analyst for Rabobank and author of the report, expects the reefer imbalance to worsen in the upcoming export season and container rates to continue to increase throughout the winter season.
Exports from North America have responded to the early challenges of higher container rates and lack of schedule reliability. Now, they must contend with ongoing issues in new ways, according to the report.
The pandemic has created steep logistics issues with no quick fixes, according to the report. Global container rates grew over 800% since the beginning of the pandemic for export and import. The LA to Shanghai rate went from about $6,000 per 40-foot container in early Aug. to $20,000 per 40-foot container in Oct. 2021.
The number of ships at anchor in Los Angeles and Long Beach since June 2021 waiting to offload reached new highs when congestion worsened since Aug. 2021. In North America, Western ports were most negatively impacted. In addition, outbound container reliability and labor shortages added even more layers of difficulty.
The tree nut industry has taken the brunt of losses due to logistics problems created by the pandemic, according to Magaña. The losses for fresh fruit exports were smaller by comparison. For example, almond exports were down 36% in Oct. 2021 from Oct. 2020. Also, more than half of walnut exports have been either cancelled, delayed or rescheduled.
From the tree nut and fresh fruit industries
“The logistics crisis has hit us pretty hard. It’s been like a game of logistical whack-a-mole.” said Geoffrey Bogart, director of global technology and regulatory affairs for the California Almond Board. “What happens after we get through this next wave of logistics challenges?”
“California almonds make up 80% of the global volume of almonds. And 70% of California almonds are exported. We were often left waiting for containers for space for our almonds,” Bogart added. “We need regulatory help. We need ships in Oakland. We need multi-faceted solutions to a multi-faceted problem.”
“The ocean shipping crisis is extremely complicated, said Caroline Stringer, trade director for the California Fresh Fruit Association. “As goods began arriving for the holiday season in West Coast ports, the situation became even more dire for ag exporters. Port congestion has begun to improve slightly. But the cost to ship has doubled or tripled and, in some cases, quadrupled.”
Stringer said the rising cost of production isn’t reflected in customer’s prices. “Higher prices in grocery stores are paying for added costs of shipping and trucking,” she said. “Growers aren’t seeing the returns of higher prices at retail. Growers are bearing the brunt of the situation. We want to avoid growers not harvesting because it makes more financial sense. “
Stringer said she’s been lobbying to officials in Sacramento and Washington, D.C. for over 10 years. Container shortage and congestion have been issues at least that long, she said.
South America
In South America, Chile and Peru haven’t experienced major delays, but that will change for the upcoming export season. Shippers will begin to export shorter shelf-life fruits to already congested ports in the US, Europe and Asia, the report said.
Major commodities affected will be blueberries, table grapes, sweet cherries and other stone fruit, according to the report.
Finding Solutions
Weekly shipments of the Cherry Express service have been secured for the season, reducing transit times from Chile. Not only have shipments of sweet cherries been secured but other commodities as well, Magaña said.
As global logistics challenges continue into 2022 and through the year, planning ahead as much as possible will be critical.
This type of planning could help shipments to Europe and Eastern US ports, according to Magaña.
Trucking Challenges
In the trucking industry, lack of labor and lack of trucks have posed the greatest challenges to shippers, according to Xinnan Li, Analyst F&A Supply Chains for Rabobank.
“Drivers began staying home after COVID-19. Some of them have taken jobs in other industries,” Li said. “Trucking prices have increased 60-70% since the pandemic began, and the prices continue to increase, unlike the shipping industry.”
Shipping prices have leveled off or even come down from the highest rates since the pandemic began.
