AgTC 2014 Conference – Key Takeaways for Agricultural and Forest Products Supply Chain Professionals

In 1988, just 12 agricultural professionals attended the Agricultural Ocean Transportation Coalition’s (AgTC) first meeting in San Francisco. Today, 26 years later, the organization is the leading voice of agricultural exporters in U.S. transportation policy for trucking, ocean and rail.

The group has grown exponentially and now provides agricultural and forest products shippers, farmers, ocean

freight carriers and cargo owners and forwarders with a forum for exchanging information, shaping transportation policies and tackling issues.

Here are highlights from the event, attended by some of the biggest players: Seaboard Food, Blue Diamond Growers, Cowboy Trading, Paramount Farms and Allenberg Cotton.

3 key takeaways from this year’s AgTC 2014 conference:

1. Economic growth and trade growth are opening up new opportunities
   Last year, world economic growth was up 3.2 percent compared to 2.5 percent the previous year and trade growth increased from 2.6 percent to 4.1 percent.While weakness in emerging markets persists, moderate growth is projected for 2014 – at a faster pace than developed countries. As emerging market opportunities pick up pace and the Eurozone steadily recovers from recession, world GDP and trade growth are accelerating, as are opportunities for agricultural exporters. Not surprisingly, foreign markets are more important than ever for U.S. agricultural producers, because growth rates, both in population and consumption patterns, are higher than in the U.S.
2. Demand for transportation to and from ports is driving interest in alternatives:
   From a logistics perspective, demand for transportation services to and from ports and from farms to packing and cooling houses is huge. Of all industry groups, agricultural shippers must move perishable items in a timely manner so  they don’t spoil. In addition, if exports miss an export date, the result can be a costly loss of sales. In many cases, if a ship leaves port without the shipment on board, the next shipment might not be scheduled for another two weeks, causing customers to defect to competitors.This huge demand, coupled with a growing freight capacity crunch, is driving agricultural companies to explore alternatives to do-it-yourself (DIY) transportation. The top two choices: dedicated fleets and Transportation Management systems.By replacing DIY transportation with a dedicated model, agricultural companies can realize time and money-saving benefits, like lower distribution costs, fewer delivery delays, better customer service, reductions in weekly fleet miles, safety improvements, and more flexibility for responding to spikes in volume. Dedicated fleets give businesses like farms and nurseries, which operate around peak seasons, with resources designed to meet fluctuating demand.As for transportation management systems, more and more agricultural companies are using them to coordinate transportation from packing houses to ports, with some companies managing upwards of $40 to $50 million of freight.
3. Dispatches from the west coast on port contract negotiations
   Two officials of the International Longshore and Warehouse Union (ILWU), along with ocean carrier officers, executive directors from the ports of Oakland and Los Angeles and five maritime journal writers met to discuss contract negotiations. The outcome of the meeting was inconclusive, however. The expectation that carriers will not impose $1,000 congestion surcharges filed with the Federal maritime Commission, which generated real animosity among customers and inquiries from 39 different organizations, including the AgTC.In related news, congestion at the ITI Hanjin, Maersk and APL terminals at the Los Angeles and Long Beach ports remains problematic. However, the situation is not the result of longshoreman efforts to influence the previously mentioned negotiations. Instead, the congestion is happening because several terminals ordered the wrong chassis and other equipment. ITI’s expected that it will be several weeks, if not months, before the correct equipment is delivered.  Until then, work disruptions and delays are expected to continue.

Prediction: the contract will likely be a three-year contract signed in the coming days/weeks. Disruption at the ports as a result of the contact will be minimal. However, this prediction is NOT based on public statements made by the ILWU or Pacific Maritime Association (PMA).

Clearly, agricultural, farm and forest products shippers gained a great deal by joining the industry’s movers and shakers at the AgTC’s premier event last month.

Wesley Reeves is Director of Business Development for Ryder Dedicated, Ryder Supply Chain Solutions. Wesley joined Ryder three years ago and is responsible for developing and maintaining strategic relationships with Agriculture companies.