From Cotton Grower Magazine – July 2014
The relationship between cotton shippers and warehouses dates back to the beginnings of the cotton industry. But what was once written on a blackboard or sealed by a handshake has been swept away by a rapidly moving global industry. Time and communication – or the lack thereof – has often become a sticking point in today’s movement of cotton.
Like other segments of the U.S. cotton industry, warehousing has seen its share of transition and change.
“In 2006, when the Performance and Standards Task Force was created for the industry, there were roughly 420 cotton warehouses with cotton storage agreements,” said Dale Thompson, manager, Marketing and Processing Technology for the National Cotton Council. “Today, that number sits at approximately 350 warehouses. Although we’ve seen a net decline in the number of warehouses, capacity is relatively unchanged. We can still handle a large crop.”
Thompson noted that the warehousing segment had to adjust from servicing a domestic textile industry that wanted consistent, running shipments throughout the year to servicing an export market made up of windows for movement of several million bales of cotton at a time. That, he said, puts pressure on all parts of the industry, particularly the transportation and warehousing sector.
“You can get cotton scheduled to ship,” he added. “But if the trucks aren’t there, it backs everything up through the system. Everything today is geared toward being able to provide service on an as needed basis. The challenge comes in handling those peaks.”
Several good electronic calendars and scheduling tools are available today, and most warehouses rely on them to help manage shipping requests based on supply and available transportation. One of the newer systems – Batch 23 from EWR, Inc. – is now being enhanced to capture all orders and load dates requested by shippers and the earliest available load dates offered and provided by warehouses to allow USDA a way to monitor activity without relying on standard weekly shipping reports from warehouses.
“Batch 23 has been in place for three years,” said Thompson. “It was developed at the request of the cotton industry, but what has not been in place is the ability to capture and store requested and offered shipment dates. The NCC has agreed to underwrite the cost of developing these additions to the software. Shippers will now be able to see information on all of their shipping orders at warehouses. The warehouses can see information on offered and actual shipping dates. And USDA can monitor it all.”
This information will allow USDA and warehouse examiners to make sure all parties involved are operating in good faith to move cotton as quickly as possible.
USDA will focus on actual shipping activity. The shipping standard in the Cotton Storage agreement requires warehouses to ship at least 4.5 percent of their available inventory each week. There’s risk involved for warehouse operators found to be delaying shipments or not meeting other terms of the shipping standard may receive notices of violation or lose the ability to store Commodity Credit Corporation loan-eligible cotton.