As the weak dollar makes the fruits of California farms ever more attractive to overseas buyers, big exporters like Sacramento's Blue Diamond Growers are finding it tougher to get their products to far-off customers.
The high price of oil and shifts in the global balance of trade have made space on container ships hard to come by. Cargo rates are up sharply. Delays of several months have become routine.
"It's really put a crunch on U.S. ag exporters," said Tammy Rossi, Blue Diamond's manager of logistics and operations, as a forklift driver parked the last of 22 tons of almonds in a shipping container at the company's loading dock one morning last week.
If all goes well, the 40-foot-long box will sail from the Port of Oakland through the Golden Gate on Monday and reach Germany 30 days later.
A tangle of economic trends, however, has made the journey from Sacramento to Hamburg far less routine than it was just two years ago.
From 2001 through 2006, a growing trade imbalance meant more and more containers reached U.S. ports full but left empty. Cargo carriers hungry to fill their ships offered rock-bottom prices and quick service to exporters.
"If the alternative is to send an empty container back, you put your hands on any customer you can," said Asaf Ashar, co-director of the University of New Orleans' National Ports and Waterways Institute.
But the tide has shifted. The slumping U.S. economy has lowered demand for imports, while booming global demand for food commodities has boosted exports. The weak dollar, which has lost 24 percent of its value against the euro since early 2006, has made imports more expensive for U.S. buyers and exports cheaper for customers abroad.
As a result, fewer empty containers are heading out of U.S. ports.
"The market power is changed," Ashar said. "Shipping lines are putting the squeeze on (exporters) now."
The base cost of shipping a 20-foot-long container – the industry benchmark – from the Port of Oakland to Europe has risen 25 percent in the past year to around $2,500, according to David Enberg, a manager with the freight-forwarding firm EFI Logistics. He expects prices to rise another 20 percent by year end.
Another result, said Kirk Messick, senior vice president at Sacramento's Farmers' Rice Cooperative, the state's largest rice exporter, has been a phenomenon familiar to holiday air travelers: Carriers overbook, and cargo, especially heavy cargo like almonds or rice, gets bumped, to wait weeks or months for another ship.
"We lost 30 to 40 percent of our bookings for two months," Messick said.
Shipping companies counter that some exporters are trying to game the system, reserving blocks of space on a ship and then failing to deliver all the promised cargo on time.
High oil prices have tightened the squeeze. To offset rising fuel costs, many carriers have raised prices and, similar to the airline industry's response, dropped speeds, typically by 10 percent, according to shipping industry analysts.
Sailing slowly saves fuel but makes each trip take days longer. That effectively lowers the amount of cargo space available on the global shipping fleet because ships spend more time at sea rather than in port.
The space shortage is compounded by booming trade between Asia and Europe, which has prompted carriers to shift some ships away from routes that call at American ports.
What's more, goods exported from the United States – nuts, grain, wine, scrap metal – tend to be heavier, per unit volume, than the clothes, electronics and other consumer goods that make up much of U.S. imports.
"The imports are usually very fluffy," Ashar said.
A ship that can handle a load of 8,000 full containers from Hong Kong to Oakland may be able to carry fewer than 6,000 on the return trip.
The changing winds of international trade are increasing the cost and hassle of exporting almost any product.
Midwestern farmers and grain brokers appear to be having the most difficulty with shipments, since empty containers must be hauled far inland to grain terminals. Peter Friedmann, who heads the Agriculture Transportation Coalition, an industry group, said overseas shipping rates have doubled for service from some areas, and that recent crop exports could have been 20 percent higher if not for bottlenecks.
Call The Bee's Jim Downing, (916) 321-1065.
