In a recent episode of Cotton Grower® magazine’s Cotton Companion podcast, Buddy Allen, President and CEO of the American Cotton Shippers Association, provided insight on some of the current shipping challenges facing cotton and other commodities.
CG: We’ve heard stories about cotton and other export products sitting at the ports waiting for containers and ships. What are the details and what’s being done to try to correct the situation?
Allen:
“It’s a real problem, and it starts with inbound cargo. Right now, containerized imports to the United States are running at a level about 50% higher than the 10-year trend line.
“COVID changed the way our culture spends money. During quarantine, we’ve been purchasing things rather than experiences. The derivative effect is this tremendous volume of manufactured goods being containerized and shipped in from Asia, and our intermodal interior infrastructure just cannot handle it. We’re overwhelmed when it comes to rail capacity, port capacity, container availability, chassis, truck drivers – every link in the supply chain is being stretched. The congestion just moves around and increases, causing rescheduling and logistical challenges throughout the supply chain.
“We’re seeing about two containers sail back empty compared to every container loaded with agricultural exports. That gives us real concern. And let me be fair. Ag exports are heavy compared to manufactured imports. When they load the vessel with bulk ag commodities, they cannot fill every container. Traditionally, we’d see about half of those boxes returning empty. Now, we’re seeing two-thirds of them. And with the increased value of import shipping and how lucrative that proposition is, this equipment is being repurposed, adding time, uncertainty and costs to the supply chain. Ultimately, that compromises our competitiveness compared to Brazil or other global competitors.
“All of these challenges simply add cost and take away value from our commodity. It’s our job to manage those logistical costs just like other risks we handle.
“Our Government Affairs team is working closely with legislators, appropriators and regulators. The Surface Transportation Board has oversight for the interior intermodal moves, and the maritime piece is covered by the Federal Maritime Commission. Both fall under the purview of the Senate Commerce Committee and the House Transportation and Infrastructure Committee. We’re working with those regulatory groups, Congressional oversight committees and the Administration to try to identify where we need long-term investment in infrastructure and where can we use our equipment more efficiently today.
“Memphis, where we’re based, has five Class One rails and is an intermodal hub. It’s where a very large amount of the AR-LA-MS cotton is concentrated and sent to domestic mills or shipping ports for export. We have the Memphis Supply Chain Innovation Team under the direction of the Federal Maritime Commission where all supply chain participants work together to try to solve problems. We’ve identified the way we provision chassis as the weakest link.
“Ultimately, we would like to see there be more choice, more interoperability, more efficient utility of existing equipment, and infrastructure so we can move as much cotton or other cargo as possible, given the restraint and pressure we’re in.”