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Container Shortage Strangles Ag Exports by Mateusz Perkowski Capital Press, March 20, 2010

Costs skyrocket; 70,000 more containers needed

PORTLAND, Ore. -- Hay exporter Rollie Bernth doesn't suffer from a deficiency of overseas customers.

The problem is transporting his hay across the Pacific Ocean, said Bernth, president of the Ward Rugh hay company in Ellensburg, Wash.

"We're not able to get hay shipped," Bernth said. "It's getting really critical right now."

Cargo container availability is low, delaying hay shipments and slowing down business, he said. "We haven't seen it this bad for many years."

Mark Anderson, president of Anderson Hay & Grain in Ellensburg, Wash., said the dearth of containers results from the reduced flow of imports into the U.S.

"It's a huge challenge right now," he said.

Bernth and Anderson aren't alone in their concerns.

The shortage of cargo containers has become a major impediment for the regional farm industry, said Katy Coba, director of the Oregon Department of Agriculture.

"We're not able to access containers on the West Coast," Coba testified before the International Trade Commission on March 12.

The commission held a field hearing in Portland about the challenges faced by small- and medium-sized exporters. Coba attributed the problem to containers bypassing smaller ports as they head inland by rail.

Ocean carriers are looking to cut costs, so they're not willing to move empty containers from other parts of the U.S. into the Pacific Northwest, Bernth said.

The decrease in U.S. consumer spending during the recession has hurt import volume, so carriers have also begun charging more for exports to make up for lost revenue, he said.

"Our ocean freight rates are double what they were a year ago," Bernth said.

Exporters shipping from Portland faced a deficit of roughly 70,000 containers last year, testified Greg Borossay, marine marketing development manager for the Port of Portland, before the ITC.

Trade patterns have created a "mismatch of equipment flows," resulting in container shortages in some areas even while others have an abundant supply, he said.

Regions with a larger population base import more products, winding up with more empty containers, Borossay said.

Railroad companies have tripled the cost of moving empty containers in recent years, which has discouraged carriers from repositioning them, he said.

Export companies can pay to move containers themselves, but that will "often cause the export commodity to become more expensive when compared to other global sources," Borossay said.

Traffic in and around major ports may eventually cause smaller ports to become more competitive, potential boosting the number of available containers, he said.

For that reason, government investment in port infrastructure would increase competition and be a big help for exporters, Borossay said.

Freight efficiency is especially important to small- and medium-sized exporters, said Walter Evans, chairman of the trade policy committee for the Pacific Northwest International Trade Association.

"They are at the most risk of transportation delays," he said.