WASHINGTON – Each year, Allied Potato fills thousands of shipping containers at its plant in Pasco with Eastern Washington potatoes destined to become chips and fries in Asia, Latin America and North Africa.
But to reach their destinations, those containers need to find space on ships leaving the ports of Seattle and Tacoma. That’s been a tall order since late 2020, when supply chain disruptions and a jump in U.S. imports from Asia created shipping bottlenecks, said Jason Davenport, the company’s president.
“Pretty much every week we’re just having to guess at when we can go turn in the containers at the port,” said Davenport, whose company also grows potatoes in Southern California. “They just don’t care about exports right now. They’re making too much money on imports to really care that much.”
After being cleaned on the processing line at Allied Potato in Pasco, Washington potates are moved to a bagging area and then to a warehouse to wait for loading into shipping containers Friday, Mar. 31, 2022. The challenge of processors like Allied is to keep the potatoes fresh as they travel for weeks at a time to a variety of Asian nations. (Jesse Tinsley/The Spokesman-Review)
Because the companies that operate container ships make most of their revenue from importing goods for U.S. retailers like Amazon and Walmart, Davenport said, since the COVID-19 pandemic upended global trade they have increasingly chosen to rush empty containers back to Asian ports instead of letting U.S. exporters like Allied Potato fill them. That unpredictability has driven up costs for exporters and contributed to rising prices around the world.
The Senate took a major step to address that problem March 31, passing the bipartisan Ocean Shipping Reform Act by a unanimous voice vote after the House passed similar legislation in December. Both chambers will need to pass the same bill before President Joe Biden can sign it into law.
Sen. Maria Cantwell, a Washington Democrat who chairs the Commerce, Science and Transportation Committee, has been a major proponent of the bill.
“Right now, the supply chain isn’t working,” Cantwell said on the Senate floor after the bill’s passage. “Our ports have been clogged, shipping companies have struggled to keep up with demand, and the cost of American exporters – who are trying to get hay, milk, and apples to the global market – have gone through the roof.”
“American exporters and their products are being left on the docks,” she continued, “and that’s why we wanted to act quickly, because the American farmer, with growing season upon us, can’t afford to wait another minute.”
The bill gives greater authority to the Federal Maritime Commission, an agency charged with protecting the interests of U.S. companies that rely on ocean shipping, to prohibit carriers from “unreasonably” denying exporters the chance to load their products onto ships. It also empowers the agency to investigate the shipping giants’ business practices and penalize the companies if they charge exporters late fees that violate federal regulations.
Fifty years ago, Anderson Hay & Grain started shipping hay to Japan, its first overseas market. Today, the Ellensburg-based company exports about 80% of its product to more than 30 countries in Asia and beyond – at least until the supply chain problems started.
“Some of those countries we can’t even get product to right now, because of vessels and changes in schedules and just lack of service,” CEO Mark Anderson said. “Or, in some markets, ocean freight rates that are so high it’s not possible to use.”
The cost of shipping a 40-foot container rose from $1,300 before the pandemic to a high of $11,000 last September, Reuters reported. Part of those rising costs are inevitably passed on to consumers in the form of higher prices, a key factor contributing to inflation, but Anderson said his company’s profit margin has shrunk to minimize the impact on its customers.
Inflation and supply chain problems across the economy mean delays and higher costs to producers for things like tractors and fertilizer, Davenport said.
“We’re constantly faced with increasing prices to us, and we’re having to be more careful than we’ve ever been managing our costs,” he said. “We don’t even know how to navigate these waters. Like, we don’t know what to do other than to make sure that we don’t lose so much money that we’re not farming again next year.”
At the same time, exporters have been forced to play what Davenport called “a game of Whack-a-Mole” at ports like Seattle and Tacoma as loading schedules are shuffled. Whereas they once had four or five days to load a vessel, now they often have just one or two days. To make matters worse, he said, carriers change deadlines for getting containers onto ships.
An informal survey sent to the White House in September by the Agricultural Transportation Coalition, an industry group, estimated U.S. exporters are losing 22% of their sales due to shipping bottlenecks.
When truckers can’t unload their cargo onto a ship, they have to find space in a container yard outside the port to leave the goods until the next ship arrives. Anderson said his drivers used to make the more than 100-mile trip to Seattle or Tacoma twice a day, but now just once a day because of delays at the ports.
“It’s really workplace chaos if you’re a driver, and not to mention if you’re in charge of logistics or production,” Anderson said. “There’s just a lot of frustration.”
Davenport said he hopes the Ocean Shipping Reform Act will level the playing field for importers and exporters and help American farms keep running.
“I know we want to feed people and feed the world, but we need a little more help from government to not get to the point where (everyone in) agriculture just all throw their hands up and say, ‘Why are we working so hard for this? This is crazy,’ ” Davenport said.
“It may slow down their operations a little bit to give exports a little bit more priority, but we kind of need that or else we lose a lot of ground that we’ve gained on a lot of export markets for agriculture,” he added. “That impacts a lot of farms around Eastern Washington and that’s not helpful to anyone.”
Anderson expressed cautious optimism about the bill, even as he said he was skeptical about the federal government taking a more active role in regulating trade.
“Of course, you get concerned anytime the government starts getting in the middle of business and economics,” Anderson said. “But I think it’s a step in the right direction.”
Before the bill can become law, the House and Senate must either pass identical legislation or reconcile their different bills in a conference committee. The House is out of session until April 26.
In the Senate, the bill was led by Sens. Amy Kobuchar, D-Minn., and John Thune, R-S.D., and co-sponsored by 31 senators including Cantwell and Idaho Republicans Mike Crapo and Jim Risch.
The House version is led by Reps. Dusty Johnson, R-S.D., and John Garimendi, D-Calif., and co-sponsored by nearly 100 lawmakers including Reps. Dan Newhouse, a Republican who represents the Tri-Cities, and Kim Schrier, a Democrat who represents Ellensburg.
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