State leaders open a dialogue on how to cure ills of supply chain export system
Stories of skyrocketing shipping costs, empty containers taking up outgoing ship space and once-flourishing California farm exports left to sit and lose value — or even rot — were the focus of a joint California Assembly hearing this week on how the global shipping crisis has hurt the state’s many farming interests.
“Our export situation not only has not improved, but continues to get worse,” said Craig Duerr, vice president of global sales and marketing for Campos Brother’s Farm. “The agricultural climate is not like anything I’ve ever seen.”
Assembly members agreed, calling the situation frustrating.
“Those of us on the Agriculture Committee understand what’s going on and are very, very frustrated,” said Cecilia M. Aguilar-Curry, D-Winters, whose district includes Napa, Yolo and Sonoma counties in Northern California. “I would hope we understand the urgency, that people’s lives are on the line here. Products are sitting in warehouses and prices (for products) are going down.”
The two-hour informational hearing on Wednesday, Feb. 2, brought together the Assembly Agriculture Committee and Assembly Select Committee on Ports and Goods Movement. The hearing was chaired by theose commitees’ respective chairmen, Assemblymen Robert Rivas, D-Salinas, and Patrick O’Donnell, D-Long Beach.
Some help is already in the works, officials said.
Port of Los Angeles Executive Director Gene Seroka, for example, is part of a group looking specifically at the drop in exports, focusing on the challenge of getting rail service to bring cargo more efficiently out from the nation’s interior.
Over the past two years, he said, they’ve called for a national and state export policy.
“We need to get farmers and manufacturers back in the international game,” Seroka told the committee. “We need to move exporters in position to do better.”
Port advances in such areas as digitization are trailing ports in other nations, Seroka added.
“We’re 30 years behind other trading nations in this,” Seroka said, referring to the ability to share information tracking containers. “We can track a pizza order coming to our home better than we can track a container.”
The discussion Wednesday focused on California’s 11 ports and the exporters they serve.
The $17 billion ports and waterways allotment included in recent federal funding will help, Seroka said, with a focus on creating better connections and “bringing the Central Valley and Inland regions closer to waterfront ports.”
The Port of Oakland, where 50% of agricultural exports leave California each year, will open a 25-acre, off-terminal container yard to improve the flow of agricultural exports.
But as with everything having to do with the supply chain, there’s not a single solution.
Making better use of Oakland and Stockton ports were options mentioned frequently.
“Normally, a number of ships would take cargo off at Los Angeles and Long Beach ports and then come up to the Port of Oakland to load up exports heading back to Asia,” said Karen Ross, secretary of the California Department of Food and Agriculture.
More often now, officials said, the ships unload imported cargo at L.A./Long Beach, only to turn back around and return to Asia with empty containers instead.
Danny Wan, president of the California Association of Port Authorities and executive director of the Port of Oakland, spoke about the need to modernize the space the port does have but can’t always use.
While agricultural exports have gone up nationwide, he said, exports going out through California have dropped.
“It seems like a paradox to us,” Wan said, “but California as a whole is losing export market share.”
The announcement this week about the Port of Oakland’s new space will include incentives for agricultural exporters, Wan said, with refrigerated container plugs and providing more terminal space by getting empties out of the way.
Assemblyman Mike Gipson, D-Carson, also said the current truck driver shortage is part of the equation.
“How do we rectify that,” he said, “how do we solve those outstanding issues?”
The Pacific Merchant Shipping Association suggested supply chain policies to help California agricultural exporters acquire equipment and transportation services for reasonable costs, as well as working with ports and local governments to allow off-terminal staging areas where empty containers can be moved.
O’Donnell, meanwhile, suggested a policy requiring terminals to commit to sending out a certain percentage of exports as part of their overall business.
“Maybe we need to take a look at requiring some type of export requirement for signed leases for terminals,” O’Donnell said. “I don’t think it (should) be too prescriptive, but it might be wise to put some onus on terminal operators.”
For those caught in the supply chain quagmire, solutions are needed soon.
“We’re losing market share to international competitors not facing” the rising costs and long delays, said Michael Parr, vice president of international sales for Wente Family Estates in San Francisco, a large wine exporter.
The ongoing uncertainty and economic loss is untenable, said Duerr, with Campos Brother’s Farm.
“We cannot bill an export customer without a bill of lading (cargo) and we can’t get a bill of lading until (the product) is on a ship,” Duerr said, “so every time we have a vessel delayed it translates into hundreds of millions of dollars.
“This is unsustainable for many of our businesses,” he added.
A lack of port modernization, inflated fees and unreliable shipping schedules all must be addressed, he said.
“We’re strongly feeling the impacts,” Duerr said, “and, honestly, the corrections cannot happen fast enough.”