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NMPF Continues Push on Supply Chain Constraints

November 3, 2021

While national headlines are dominated with news of delayed imports threatening to put a damper on the upcoming holidays as a result of supply chain disruptions, U.S. dairy exporters are facing an increasing, and in some ways opposite, difficulty: Securing containers and cargo ship space for their products.

That issue is gaining broader attention as well, thanks in large part to the efforts of the U.S. Dairy Export Council (USDEC) and NMPF, which along with other ag organizations and companies are leading the policy push for supply chain improvements.

That work commanded a larger spotlight recently as Congress convened to examine the supply chain impacts on American agriculture and related sectors. The current supply chain crisis could cause “irreparable harm” to agriculture, Mike Durkin, President and CEO of Leprino Foods, said at a U.S. House Agriculture Committee hearing Nov. 3 about how supply chain issues are affecting export markets for Leprino and the U.S. dairy industry. USDEC and NMPF voiced strong support for Durkin’s call for U.S. government action to more effectively tackle the shipping crisis and its effects on dairy farmers and manufacturers.

“The supply chain challenges have significantly impacted our business, and we don’t expect them to ease anytime soon. I’m here to talk about a critical component of this disruption that has not received much attention – exports,” Durkin said. “This export crisis may well result in irreparable harm to American agriculture as customers around the world are questioning the U.S. dairy industry’s reliability as a supplier.”

Durkin called on Congress to act on ocean shipping legislation, address critical transport-industry labor shortages, increase port hours of operation, and take other steps to help American agriculture producers reach their foreign markets effectively.

Even as cargos coming from Asia are at full capacity, 72% of containers leaving major California ports are leaving empty – a record volume. While supply and demand issues are a large part of the problem, foreign-owned carrier lines have taken advantage of the situation to forgo loading U.S. exports in favor of loading empties for a quick turnaround toward more lucrative Asian imports. As a result, continually rolled bookings, unprecedented shipping rates, product deterioration, and high detention and demurrage fees have cost American dairy exporters nearly $1 billion through just the first seven months of the year. As a result, even as international demand for dairy products reaches records, U.S. shippers are losing market share to competitors as the United States risks its reputation as a reliable supplier.

NMPF, USDEC and policy partners continue to drive home with the administration and Congress the long-term implications this crisis will have on dairy exporters unless measures are taken to reign in unwarranted carrier behavior. That work has helped to build bipartisan support in Congress for the Ocean Shipping Reform Act (H.R. 4996), which now has 65 cosponsors. A briefing paper on the legislation is here; a new “frequently-asked questions” document compiled by NMPF can be found here. In October, NMPF and USDEC urged the Department of Transportation to voice support for the legislation and provided detailed recommendations on several other concrete steps that DOT and its interagency partners could take to help address the shipping crisis.

The past month has seen a spate of steps announced to begin to help address the supply chain problems. The announced follow a series of meetings NMPF, USDEC were the sole dairy organizations that a long with  a few other agricultural leaders held with officials in September, including with White House Ports Envoy John Porcari and other White House supply chain task force staff, to help drive home the depth and complexity of the shipping-related challenges facing dairy exporters.:

  • As a partial response to NMPF sharing specific data on the impact of the issue and direct advocacy, USDA announced Sept. 29 that the agency will provide $500 million “to provide relief from agricultural market disruption, such as increased transportation challenges, availability and cost of certain materials, and other near-term obstacles related to the marketing and distribution of certain commodities.” NMPF will be sharing member feedback on how the funds could be best used to mitigate the congestion in a meeting with USDA officials next week.
  • On Oct. 13, following months of intensive advocacy to the administration from NMPF, President Biden announced a series of public and private commitments from ports, dockworkers and large companies aimed at addressing port bottlenecks that have been snarling supply chains for nearly a year. The commitments included
    • An expansion to 24/7 operations at the Ports of Los Angeles and Long Beach
    • An International Longshore and Warehouse Union announcement that its members are willing to work the necessary extra shifts, and
    • A pledge from six large companies – Walmart, UPS, FedEx, Samsung, Home Depot and Target – to use the expanded hours to move more cargo off the docks so ships can come to shore faster.
  • On Oct. 20, California Governor Gavin Newsom issued an executive order that directs state agencies to identify state, federal and private land for short-term container storage; extend a temporary exemption to current gross vehicle limits to priority freight routes; and establish workforce training and education programs.

NMPF encourages the dairy farming community to reach out to elected officials to voice support for the proposed House legislation and highlight the importance of action to deal with the shipping crisis impacting dairy exports.