NMPF, USDEC Push for Additional Supply Chain Relief Post-OSRA

As the Ocean Shipping Reform Act (OSRA) takes effect and dairy supply chains continue to face turmoil, NMPF and partner organization the U.S. Dairy Export Council are seeking additional policy solutions while fostering cooperation with port authorities and other key supply chain players.

NMPF President and CEO Jim Mulhern and USDEC President and CEO Krysta Harden met July 7 with retired Army General Stephen Lyons, the new Ports and Supply Chain Envoy for the Biden Administration, to ensure the needs of U.S. dairy farmers remain a priority as OSRA, supply chain-relief legislation passed into law in June, is implemented and additional remedies are pursued, pressing him on a range of critical matters to ensure continued administration support solving supply chain issues.

NMPF also joined a coalition of 157 trade associations in urging the White House to provide support to parties locked in negotiations over a dock worker strike at West Coast ports. At issue is the expired contract between the International Longshore and Warehouse Union and the Pacific Maritime Association.  A work stoppage, lockout or slowdown would come at a disastrous time for ag exporters.

NMPF also engaged the U.S. President and CEO of Mediterranean Shipping Company (MSC) Fabio Santucci on a wide-ranging call on July 12 to discuss the export crisis from the perspective of shippers. The meeting was part of a broader effort to identify opportunities to improve relations with carrier lines, which also included a meeting with Orient Overseas Container Line (OOCL) on July 8. In both meetings, NMPF focused on the challenges members face in container availability, cancellations, delays and fees and emphasized the negative impact these challenges had on relationships with import markets.

On the legislative front, NMPF provided input into and endorsed the American Port Privileges Act, legislation proposed  June 28 that would require U.S. ports to give priority to ships carrying U.S. exports. The legislation, introduced by Reps. John Garamendi (D-CA) and Jim Costa (D-CA), builds on OSRA and offers preferential berthing access by moving vessels that load 51% or more by volume or weight of American exports to the front of the loading queue. It also incentivizes ocean carriers to make second-leg voyages to ports like the Port of Oakland, the largest U.S. port for dairy exports.

All this comes as supply chain challenges continue to cascade across shippers and port facilities. As of late July, the Port of Oakland was closed due to protests over a new California trucking law. Meanwhile, even though several of OSRA’s helpful provisions have taken effect — including robust detention and demurrage payment guidelines – following them has not been instant, with the Federal Maritime Commission reminding shipping carriers on July 22 that compliance is necessary.

In that environment, NMPF and USDEC continue to pursue additional ways to advance policy and shipping-sector solutions.

U.S. Dairy Endorses Ocean Shipping Antitrust Enforcement Act

In response to last week’s introduction of the Ocean Shipping Antitrust Enforcement Act, USDEC and NMPF released the following statements:

Krysta Harden, U.S. Dairy Export Council president & CEO:
The U.S. Dairy Export Council thanks Representatives Costa, Smith, Garamendi and Johnson for introducing the bipartisan Ocean Shipping Antitrust Enforcement Act last week. U.S. dairy exporters experience a litany of unfair practices from foreign-owned ocean carriers – including unprecedented shipping rates, fees often incurred out of the exporters’ control, intentional lack of transparency, and continually rolled bookings. Due to the high concentration of power in the largely foreign-owned shipping industry, American dairy exporters have little option other than to accept these unwarranted fees and delays as a business expense. We commend the introduction of this important legislation to revoke the antitrust immunity that these shipping lines exploit at the expense of American producers and consumers, and we urge Congress to expeditiously pass this measure into law.

Jim Mulhern, National Milk Producers Federation president & CEO:
At a time when ocean carriers have been enjoying record profits, U.S. dairy producers have been bearing the brunt of the export supply chain crisis, with over $1.5 billion in added costs and lost sales in 2021 alone. We welcome the introduction of the Ocean Shipping Antitrust Enforcement Act that would reign in the enormous power foreign-owned shipping lines wield over American exporters. It has been evident over the past two years that ocean carriers do not share the interest of U.S. producers and are willing to break contracts and cancel shipments without warning. International customers want U.S. dairy products, but American dairy farmers are struggling to meet deadlines due to carrier behavior and justify the increased expense of paying exorbitant fees. This puts at risk key relationships with buyers around the world. NMPF encourages swift passage of this bipartisan legislation to put a halt to these unreasonable practices.

Efforts Advance to Alleviate Port Congestion

NMPF and the U.S. Dairy Export Council (USDEC) continue to make strides to prompt government action to alleviate ongoing port congestion and high fees limiting U.S. dairy exports.

President Biden’s Nov. 17 announced his support for the Ocean Shipping Reform Act of 2021, a key step made last month. The bipartisan legislation provides new authority to the Federal Maritime Commission to address unjust and unreasonable practices by ocean carriers. NMPF has been asking the White House to support this important legislation, which now has 80 congressional cosponsors. A briefing paper on the legislation is here and a “frequently-asked questions” document NMPF and USDEC created can be found here. NMPF continues work with agricultural organization partners to guide expeditious introduction of partner Senate legislation to limit carrier refusal to load agricultural exports in lieu of returning empty containers to Asia and address unprecedented fees that are oftentimes accrued outside of the exporter’s power.

NMPF Executive Vice President for Policy Development & Strategy Jaime Castaneda also joined members of the Biden Administration’s Supply Chain Task Force on Nov. 12 to discuss export challenges for the U.S. dairy industry. While keeping up the pressure for the administration to fully tackle the long-term implications the shipping delays have on U.S. dairy’s reputation as a reliable supplier, NMPF welcomed as notable progress a spate of announcements from the federal, state and local levels throughout November, including advancements on:

  • Individual port operation improvements;
  • Temporary easement of truck weight limits in California; and
  • The government’s release of “the Biden-Harris Action Plan for America’s Ports and Waterways,” which will accelerate port infrastructure grants, new construction projects for coastal and inland waterways and land ports of entry.

Beyond highlighting the need for additional government action, the dairy industry is also looking to rewrite the media narrative on the effects of supply chain snarls on the U.S. economy. While most of the focus of the supply chain crisis throughout the fall has been on imports of consumer goods, NMPF is working to shift the focus to include the impact that the challenges have on dairy farmers, cooperatives and the thousands of American workers throughout the dairy supply chain.

As part of this effort, NMPF contributed to a Nov. 14 New York Times article illustrating the strain that export complications have placed on U.S. agriculture, with trade team staff making key connections that made the piece an important opportunity to share dairy’s story. In the article, Brad Anderson, the chief executive of NMPF member California Dairies, Inc. noted the breadth of the issue: “This is not just a problem, it’s not just an inconvenience, it’s catastrophic.”

“Are we going to get toys for Christmas? Are we going to get chips for automobiles? We think those are real concerns and they need to be talked about,” Anderson said. “What’s not being talked about is the long-term damage being done to exporters in the world market and how that’s going to be devastating to our family farms.”

NMPF and USDEC continue to collaborate with the Ports Working Group of dairy producers and exporters to identify additional solutions to alleviate the crisis.

Dairy CEO Says Supply Chain Crisis Could Permanently Harm U.S. Agriculture

The current supply chain crisis could cause “irreparable harm” to agriculture, Mike Durkin, President and CEO of Leprino Foods, said in testimony prepared for a U.S. House Agriculture Committee hearing today about how supply chain issues are affecting export markets for Leprino and the U.S. dairy industry. The U.S. Dairy Export Council (USDEC) and National Milk Producers Federation (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.

Leprino Foods, the largest purchaser of milk in the United States, is a family-owned, privately held company with 4,500 employees and facilities in Colorado, California, New Mexico, Michigan, Pennsylvania and New York. It supports over 1,000 dairy farms and is the largest producer of mozzarella cheese as well as a leading supplier of dairy nutrition products. Leprino exports 26% of its milk equivalent volume to 55 countries.

Across the industry, approximately one day’s worth of U.S. milk production each week goes to exports, which results in about $6.5 billion in U.S. dairy products being exported to over 133 countries.

“The strain of shipping challenges is taking a heavy toll on dairy exporters, which is why it was so important that the House Agriculture Committee heard today from companies such as Leprino Foods that are doing everything possible to hang onto foreign customers yet are still bearing the brunt of this problem,” said Krysta Harden, president and CEO of USDEC. “Dairy exporters are working hard to get American-made product to foreign customers in a reliable and affordable way, but the present situation can’t be sustained long-term. We need Congress and the Administration to move swiftly to improve the efficiency and fairness of supply chains.”

“Dairy depends on exports, a vital part of the total demand for the milk produced every day by America’s hard-working dairy farmers” said Jim Mulhern, president and CEO of NMPF. “We risk damaging foreign market relationships and long-term customers if we cannot better assure efficient export flows. Leprino Foods provided some important recommendations to Congress to address the supply chain challenges. We hope both they and the Administration act quickly to provide relief.”