Container shortage in rural US hampers soybean exports

Houston — US soybean producers are struggling to get the shipping containers they need to rural areas efficiently as one of the biggest harvests in years comes to market, according to market participants.

In order to stay competitive in East Asian export markets, the logistic systems bringing containers to and from soybean farming areas in the US interior will have to improve, participants said at the US Soy Global Trade Exchange virtual conference on Aug. 26.

"US suppliers have multiple rail and port options for shipments, and one of the best crops in five years," soybean producer Grain Millers Specialty Products' Vice President Roger Mortenson said at the conference.

But soybean buyers in Asia are highly price sensitive and US growers must compete in that market with top producer Brazil, which has been growing its market share in China since the US-China trade trade tensions rose two years ago.

"If our soy exports are not reliable, buyers will find another source," said Peter Friedmann, executive director of the Agriculture Transport Coalition.

Platts Container Rate 13 – North Asia to West Coast North America – climbed to $3,450/forty-foot equivalent unit, or FEU, on Aug. 17, the highest since Platts launched the assessment in 2017 and was up by 138% ($2,000/FEU) compared with Aug. 16, 2019.

But container rates along the backhaul route are relatively stable as most containers shipped back to Asia from the Port of Los Angeles are empty despite a strong need for soybean producers to move their harvest in that direction.

Port of Los Angeles director Gene Seroka said data can be utilized to bring goods manufactured in China to soybean producing regions in the US Midwest by container and return them with soybean cargoes. But the lack of adequate rail infrastructure in many farming areas will remain an impediment.

"There are a lot of gaps in the rail network in rural areas," despite the same demand for imports as coastal areas, Seroka said.

Further deepening of the lower Mississippi Delta for transporting large soybean cargos to export terminals by barge is a possible solution, but funds for the project will not arrive until 2021, Agriculture Transport Coalition's Friedmann said.

"Some of the locks and dams there are 40 years old," Friedmann said. "We need to upgrade the infrastructure and get down to 53 feet."