Supply chain gridlock causes $2.1B loss to California agriculture

According to a recent study analyzing the effects of the 2021 supply chain gridlock and resulting shipping container shortage on California agriculture, the value of California’s containerized agricultural exports fell by an estimated $2.1 billion, or about 17%.

That’s because of exporters’ difficulty obtaining empty shipping containers between May and September 2021, according to a University of California, Davis study.

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Containerized shipping is crucial for farmers in California. Agricultural export products, such as citrus, processed tomatoes, table grapes and wine from California saw a decline in export volume of 16%, the study said.  

According to the World Bank’s Container Port Performance Index, California ports rank near the bottom in terms of global port performance. Out of 351 total ports, the latest figures rank Los Angeles at 337, Long Beach at 341 and Oakland at 334 — far behind most ports in developing countries and those on the Atlantic Seaboard, according to the study.

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Before the COVID-19 pandemic, California ports took twice as much time to unload cargo ships as the comparison group. After May 2021, the delays increased substantially, with the average container ship waiting for more than nine days before unloading, according to the study.

The study found that the financial damages suffered by California agriculture from the supply chain disruptions exceeded the industry’s losses from the 2018 U.S.-China trade war.

The lost agricultural exports mirror the fact that California ports are among the least efficient in the world. As a result, some importers now view California as an unreliable supplier of agricultural products because of inferior port infrastructure, the study said.

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Before COVID-19, California ports typically handled about 40% of U.S. containerized imports. U.S. ports outside California handled more than 1.4 million additional loaded import containers, up 23%, from May to September 2021, compared to the average for the same five-month period from 2017 to 2019. In contrast, California ports moved only about 0.7 million additional loaded import containers (up 16%) during the same time period, the study said.

According to the study, from May to September 2021, the monthly number of containers loaded with agricultural products declined by 18% out of Los Angeles, 15% out of Long Beach and 34% out of Oakland.

In September 2021, the fee for shipping a single 40-foot container from Shanghai to Los Angeles was $12,000 versus only $1,400 for the backhaul from Los Angeles to Shanghai, the study said.

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