The U.S. dairy industry lost an estimated $1.5 billion in sales last year because of shipping problems clogging U.S. ports — and the headaches continue.
“Shipping has become a major challenge, unlike anything we have seen in the past 20 years,” said Gabriel Sevilla, vice president of sales and marketing for Proliant Dairy Ingredients, headquartered in Ankeny, Iowa.
The days of expediently filling and shipping an order are gone. Each transaction has to be handled at least 20 times before it reaches the customer, and Proliant needs a lead time of six weeks, he said during the latest “Dairy Livestream” podcast.
“Port congestion and rail congestion has been a major, major problem, and not only in the U.S. but internationally,” he said.
The ports of Singapore and Hong Kong were highly congested, and the Port of Manila — which is one of Proliant’s major destinations — was so congested that shipping lines canceled all or most of their shipments there, he said.
As a result, the agricultural trans-shipment ports at Singapore and Hong Kong redirected barges that Manila could accommodate to other, more profitable locations, he said.
“The shipping lines did not want their ships having to wait around a month or two to be unloaded in the port of Manila,” he said.
With Singapore and Hong Kong congested, the company has rerouted some of its shipments to other ports in China. But Shanghai has been in lockdown for over a month because of COVID-19, and 600 to 700 ships there are waiting to be unloaded, he said.
There’s also been issues with weather and port and rail strikes that have caused the company to reroute, he said.
“Any little thing that happens makes everything very, very complicated in the supply chain,” he said.
Port congestion is a global phenomenon. It’s not limited to the U.S. East Coast and West Coast, said Andrew Hwang, manager of business development and international marketing for the Port of Oakland.
“So just getting your cargo onto a vessel doesn’t mean that you’re not going to see problems when that vessel arrives at its destination,” he said.
Recently, about 29 vessels were waiting to get into the Long Beach, Calif., complex, the lowest number since maybe December 2020, he said.
“Any respite that we have is welcome. It allows the terminals to catch up,” he said.
On May 19, four ships were waiting to get into the Port of Oakland, Calif.
“It means that our labor has been processing the vessels as fast as they can. It means that there is some fluidity in the network,” he said.
People are picking up their containers but not as quickly as hoped. Some terminals are above 90% capacity, he said.
What remains to be seen is what happens when China reopens. Shanghai is targeting June 1 to be open fully, assuming there are no further setbacks, he said.
“I do think we are going to see an uptick in vessels when Shanghai opens up,” he said.
Analysts are forecasting strong shipping all the way through the first quarter of next year for imports into the U.S., he said.
“Ultimately, that affects exports,” he said.