Strike could impact soybean shipments
October 3, 2024 | Jeff Hutton
The export of soybeans and other ag products are in jeopardy of reaching their destinations after thousands of dockworkers along the East and Gulf Coasts hit the picket lines and went on strike earlier this week.
The International Longshoremen’s Association (ILA) is at odds with the U.S. Maritime Alliance (USMX) over higher wages and a ban on the automation of cranes, gates and container movements that are used in the loading or unloading of freight at 36 U.S. ports.
While bulk exports of soybeans and other agricultural products are not directly compromised by the strike, containerized cargo will be impacted, says Mike Steenhoek, executive director of the Soy Transportation Coalition (STC), which is pushing for a timely resolution.
“We continue to not take sides in the negotiations,” he says. “We hope the ILA and the USMX can achieve an agreement that benefits both parties. As with most negotiations, some compromise will likely be required.”
Steenhoek says STC is most concerned with how this strike will impact farmers.
“While we are not taking sides between the dockworkers and the port operators, we clearly are on the side of the American farmer, and what is in the best interest of the American farmer is to have a supply chain that facilitates their ability to meet the needs of our international customers, rather being an impediment to it. Unfortunately, the current strike is one more obstacle to farmers being profitable.”
Serious impact
In 2023, 54 million metric tons of U.S. soybeans were exported by bulk; 5.8 million metric tons were exported via containers, according to the U.S. Department of Agriculture (USDA).
Of that 5.8 million metric tons shipped by containers, nearly half of that was exported via the East and Gulf coasts, Steenhoek says. The other half was primarily exported via Los Angeles/Long Beach and other West Coast ports.
“Therefore, we’re looking at approximately 5-6% of total soybean exports that will be impacted by a strike on the East and Gulf coasts,” says Steenhoek.
According to the U.S. Department of Agriculture, in 2023, exports of U.S. soybeans via container were significant.
Consider the numbers:
- Soybean exports via Norfolk, Va.: 1,616,854 metric tons
- Via New York/New Jersey: 372,110 metric tons
- Via Baltimore, Md.: 324,500 metric tons
- Via Charleston, S.C.: 217,892 metric tons
- Via Wilmington, N.C.: 47,744 metric tons
- Via Savannah, Ga.: 43,710 metric tons
- Via Houston, Texas: 24,758 metric tons
The Mississippi Gulf region (near New Orleans) is the No. 1 export region for soybeans, according to Steenhoek. In 2023, 27 million metric tons of soybeans were exported from the region – all of which occurred via bulk and not container.
“We are starting to see agricultural exporters explore other routes (such as the West Coast), which will most likely be at a higher cost and longer transit time,” he says. “This strike is one more cost intrusion into the agricultural supply chain. Some companies and facilities are better positioned to pivot from one coast to another, while many others are in such close proximity to the East Coast that shifting volumes to another route is simply not feasible.”
And while the vast majority of soybean exports occur via bulk, containerized exports are significant to the profitability of the U.S. soybean industry.
“They are obviously critical for those farmers and companies that utilize them,” Steenhoek says, adding that containerized shipping allows the industry to access particular international customers with particular demands such as smaller shipment sizes, traceability, identify preservation, etc.
And it’s not just soybeans that could be impacted by this strike.
“In addition to soybean exports, we are clearly concerned with the detrimental impact on meat exports,” says Steenhoek. “So many of the soybeans grown in the United States are fed to livestock for both the domestic and export markets. You cannot harm meat and poultry exports without harming soybean farmers.”
Opposing viewpoints
Union dockworkers say they deserve to share in the rewards of port operators.
“The Ocean Carriers represented by USMX want to enjoy rich billion-dollar profits that they are making in 2024, while they offer ILA Longshore Workers an unacceptable wage package that we reject”, the ILA said in a statement. “ILA longshore workers deserve to be compensated for the important work they do keeping American commerce moving and growing. It’s disgraceful that most of these foreign-owned shipping companies are engaged in a ‘Make and Take’ operation: They want to make their billion-dollar profits at United States ports, and off the backs of American ILA longshore workers, and take those earnings out of this country and into the pockets of foreign conglomerates. Meanwhile, ILA dedicated longshore workers continue to be crippled by inflation due to USMX’s unfair wage packages.
“In addition, the shippers are gouging their customers that result in increased costs to American consumers. They are now charging $30,000 for a full container, a whopping increase from $6,000 per container just a few weeks ago. In just a short time, they went from 6K, to 18K, then 24K and now $30,000. It’s unheard of and they are doubling their $30,000 fee stuffing the same container from multiple shippers. They are killing the customers.”
Meanwhile, the USMX says they are working hard toward an agreement.
“In the last 24 hours, the USMX and ILA have traded counter offers related to wages,” according to a USMX statement. “The USMX increased our offer and has also requested an extension of the current Master Contract, now that both sides have moved off their previous positions. We are hopeful that this could allow us to fully resume collective bargaining around the other outstanding issues – in an effort to reach an agreement. Our offer would increase wages by nearly 50%, triple employer contributions to employee retirement plans, strengthen our health care options, and retain the current language around automation and semi-automation.”
The cost and effect
Beyond soybeans and other agricultural products, the strike will impact a myriad of goods for both export and import.
Couple that with severe weather, including recent hurricanes and flooding woes, the strike could cost as much as $5 billion per day, according to labor and business experts.
Arthur Wheaton, director of labor studies at Cornell University, said the current strike will have a “broader impact” than a recent labor action that affected West Coast ports.
“This hurts our ability to export,” he says. “Almost two out of three containers that leave the United States go through those eastern ports.”
Along with the STC, the National Association of District Export Councils (NADEC) says it too wants both sides to continue negotiations.
“NADEC urges all parties to resume negotiations and reach a win-win settlement that preserves the essential flow of U.S. goods,” the organization said in a statement.
Bottom line for the STC and the soybean farmers it supports, this week’s strike is a tough pill to swallow.
“Given the many challenges confronting agriculture, now is most certainly not the time to have a port disruption further impede the ability for farmers to be profitable,” Steenhoek says.
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