West Coast labor disputes hurt Minn. exporters
Every month, Brushvale Seed in Breckenridge, Minn., typically prepares to ship about 100 containers of specialty soybeans to overseas customers. In recent years, the company has cashed in on Minnesota's growing status as a top exporter of agricul...
Every month, Brushvale Seed in Breckenridge, Minn., typically prepares to ship about 100 containers of specialty soybeans to overseas customers.
In recent years, the company has cashed in on Minnesota's growing status as a top exporter of agricultural products. At $2.2 billion in 2012, soybeans were the state's top agricultural export, with half of the state's crop going overseas.
About 10 percent of those exports are called specialty crops like soybeans that are not genetically modified, or beans with a high protein content. The crops are loaded into shipping containers and travel by rail and ship to China, Japan and Korea.
But these days, Minnesota's agricultural exporters are having a hard time moving their products to the international market. Labor contract disputes at West Coast seaports are adding to the shipping delays for farmers already hampered by railroad congestion. Nothing is moving.
"We have customers that were expecting a shipment who will not get that shipment on time," Brushvale Seed Marketing Manager Paul Holmen said. "We have growers who expected to deliver their crop at a certain time and are unable to deliver to us if we can't continually be shipping out."
Complicating matters for farmers is the perennial lack of empty shipping containers in Minnesota. Because the region exports far more than it imports, it is costly for railroads to transport empty containers back to the Midwest, which leads to the shortage.
But the situation dramatically worsened in recent weeks, said Bruce Abbe, executive director of the Midwest Shippers Association.
"There's a convergence of issues right now and it's quite acute," he said. "The most immediate one is the port strife and slowdowns out on the West Coast ports."
Minnesota farmers have produced specialty soybeans since the 1980s, and like others in the Midwest have strong relationships with Asian buyers. But their growing transportation problems could cost them, Abbe said, because they are competing in a global market with increasing competition from farmers in other parts of the world.
"If it gets settled relatively soon and we can move on, it may not affect it that much," he said. "If it goes on long and it's very disruptive over here, then yes, everything we can produce here you can produce elsewhere. Business can go elsewhere without question."
Keeping international customers happy is a challenge for Curt Petrich, vice president of sales at SunOpta, a Minnesota-based company that ships thousands of containers of specialty crops every year.
When Petrich travels to southeast Asia next week to meet with customers, he can promise them the high-quality product they expect. But he'll have to hedge on delivery schedules.
"We can show them what we can do, but we have to be really quite up front with them letting them know that we don't know if we can do a very good job of getting it to them in a timely manner," Petrich said.
To hold the backlog of orders ready for shipping, SunOpta is expanding warehouse space.
But in recent months, the company also has had difficulty serving customers on the East and West Coasts. Petrich said lately it's been easier to serve some domestic customers by importing soybeans to coastal ports from the Ukraine, China or India.
"We can bring it into the U.S. with more predictability and get it to our customers on the East Coast and West Coast than we can to actually ship stuff from Minnesota, South Dakota, Iowa, Illinois, the central part of the U.S.," he said.
Delays are causing financial penalties for companies that ship specialty soybeans.
Holmen said customer contracts might have penalties for late delivery, and if containers end up sitting at a port waiting for a ship, his company pays fees. With crops ready to export, the shipping crunch is happening at the worst possible time for his company, he said.
But there's little shippers can do, he said, except hope the clogged transportation system starts moving soon.
"Harvest of soybeans occurs in September and October and we start shipping," Holmen said. "The longer this drags out, the further behind we get on shipments and it becomes much more difficult to near impossible to catch up on shipments later on."