Klobuchar: “In the last two years ag exporters have lost 22 percent of [foreign] sales. Meanwhile, ocean carriers have reported record profits from the increased demand for imported goods...So that’s when you step in, because we want the economy to work for everyone”
WASHINGTON – At today’s Commerce Committee hearing titled “Uncharted Waters: Challenges Posed by Ocean Shipping Supply Chains,” U.S. Senator Amy Klobuchar (D-MN) highlighted the need to address supply chain disruptions and rising costs of container shipments.
Klobuchar emphasized that agricultural exporters have been hit particularly hard by increased prices and transportation challenges, noting: “At the start of the pandemic, Minnesota ag producers saw a 47 percent decline in exports and in the last two years ag exporters have lost 22 percent of [foreign] sales. Meanwhile, ocean carriers have reported record profits from the increased demand for imported goods and higher prices for container shipments.”
Senator Klobuchar: Very good, thank you very much Chairman Peters, Senator Fischer, for your work. As Senator Thune noted, we have to take action here. Agricultural exports and we both are in major -- all three of us here -- in major ag producing states, very important export for our country in so many ways. And ag exports have been particularly hard hit by increased costs and transportation challenges. One of the problems here is yes, we have supply chain problems, we all know that, we all know there’s multiple answers: improving the infrastructure, what’s going on in the shipping industry, workforce -- everything from training people to go into the jobs that we that have available now, to wages, to making sure that we do immigration reform and get some more workers into certain industries. But the problem is it’s not same size fits all.
At the start of the pandemic, Minnesota ag producers saw a 47 percent decline in exports, and in the last two years ag exporters have lost 22 percent of [foreign] sales. Meanwhile, ocean carriers have reported record profits from the increased demand for imported goods and higher price for container shipments. And so that’s what we’re dealing with here, and that’s when you step in, because we want the economy to work for everyone, and especially, obviously, for our constituents and those that are feeding the world.
Mr. Krug, in your testimony you note how your company is losing its ability to compete in the global market due to challenges moving freight. Do you agree that FMC needs to do more to protect competition?
Mr. Krug: Yes, so we certainly, you know, it’s normal markets, it’s competition that takes place. If you’re unable to deliver or ship, then that customer is going to get that product from some other part of the world.
Sen. Klobuchar: Exactly.
Mr. Krug: In the case of popcorn, we compete with Argentina, and Brazil, and so if we’re not able to deliver, they’re not going to say, “Well, we understand, we’ll wait.” They’re going to try to find that product, as competition normally works, they’re going to find somewhere else to buy it. So that’s where this becomes really important, I appreciate you understanding that. You’re doing a good job.
Sen. Klobuchar: Well, thank you. Unsolicited. Remote, but unsolicited. Mr. Regan, it currently costs 7 times more to ship an export from California to China than to ship that same product from China to California. Can you speak to some of the challenges with moving freight on land, particularly with transporting empty containers?
Mr. Regan: Sure, and we discussed a little bit of this earlier in terms of --
Sen. Klobuchar: I heard. Yeah.
Mr. Regan: -- also having our ability to manufacture them here and develop our own capacity to be able to meet some of the challenges you’re seeing here in terms of container supply. And I also want to comment that we also agree with the comments that the Federal Maritime Commission needs to have the authority to investigate and oversee the statutory requirements that are put in place by that agency.
Sen. Klobuchar: Good, thank you very much. Maybe you can take this one as well. The Port of Duluth is the largest and busiest port of the Great Lakes, with 800 vessels and an average of 35 million tons of cargo per year. Minnesota, however, has deferred building a portion of the Twin Ports Interchange, a project to replace aging infrastructure and better accommodate freight access because of construction costs. Mr. Regan, in your testimony you note how the Port of Savannah is using inland ports to hold overflow containers. How important are our inland ports in relieving some of the congestion from the coastal areas?
Mr. Regan: They are extremely important. And I think the other thing that we often find right now in terms of the lack of development in some of these major port issues is -- frankly -- funding. Funding is a big problem, in terms of pursuing whether it be more inland port, but also more intermodal facilities. And we’ve discussed a lack of rail connectivity as one of the major problems, but 60 percent of ports say that funding is their number one hurdle towards addressing some of these problems. So we’re very positive about the $2.2 billion in the bipartisan bill towards supporting Infrastructure Development Act, and that is really going to go a long way towards the long term solutions for this.
Sen. Klobuchar: Great. And from a Duluth, Minnesota perspective, agree. Mr. Krug, this will be my last question. While small- and medium-sized enterprises account for 98 percent of U.S. exporters, rural businesses are often located far from transportation hubs, making it difficult for them to access international markets. Senator Hoeven and I have introduced the Promoting Rural Exports Act -- it actually makes permanent what has been a very successful effort to have a set group of people working on rural exports and giving rural businesses the expertise they need, and this is based on our experience, both in North Dakota and Minnesota. Could you talk about the importance of rural businesses having increased access to foreign markets, and how it’s not the same as a multinational corporation -- many of them also located in my state -- who can employ full-time trade exports in different regions of the world.
Mr. Krug: Sure, well transportation, obviously, is key. We started out just a few years ago, and we put a paved road that’s only 1.2 miles long to get to the highway, but that 1 mile opened up the world. And that ability to be able to reliably ship containers each day was a big step, and the state of Nebraska was supportive of that, and so anything that can be done to improve transportation and ability to get these ag products to the marketplace is huge. And there’s, the rail, of course, is important to that, that was some of the issues that have happened too. So, great communication.
Sen. Klobuchar: The captive customers, yep. Okay, well, good. I see some of my colleagues are here, so I’ve overdone my questions here, so I want to thank you very much, all of you. Thanks.
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