Almonds destined for the export market have filled warehouses and container yards as growers, handlers and shippers grapple with the ongoing transportation disruptions happening at California’s ports.
A number of factors have contributed to the shipping challenges that began in 2020. One of the primary causes of continued disruption is a backlog of high-value products headed to the U.S. from Asia. Rather than filling export containers with almonds or other agricultural products before returning to their Asian point of origin, shipping companies are paid a premium to return empty containers as quickly as possible so they can be refilled with Asian goods destined for the U.S., which means that almonds headed across the pond get stuck in California ports.
A shortage of containers, chassis, drivers and unreliable carrier practices all contribute to the growing problem. During the Almond Board’s Training Tuesday in early March, ABC’s Senior Analyst of Government Affairs Brock Densel further described the challenge facing the almond community. “Exporters are only receiving a fraction of the bookings they need to meet global demand. These shipping delays are backing up product movement all the way to the handler level. Handlers are short on storage space; they’re spending more time getting shipments out and using more resources on measures to ensure product quality and safety,” Densel explained.
In January, the Almond Board’s Global, Technical and Regulatory Affairs (GTRA) staff conducted an online transportation survey with major handlers — together representing 38% of California’s almond export market — to get a better understanding of how global shipping disruptions are directly affecting the industry.
Here’s what they learned:
Shipping costs are going up
It has become more expensive to transport almonds to ports, keep them at the port during carrier delays and move them to their final destination. Survey respondents reported a 61% increase in the costs associated with moving truckloads from the warehouse to the port, due to the scarcity of chassis and drivers in addition to rising fuel prices. Detention and demurrage fees — costs associated with leaving cargo at a port beyond a specified timeframe — have also increased as carriers struggle to maintain shipping schedules. Cargo sitting at ports for extended periods of time means higher detention and demurrage fees, with handlers reporting an increase ranging from 15-200% last year. With containers in short supply, those prices have risen too — an average of 54% from last year. “Freight rates have doubled,” said Darren Rigg, ABC Board member and sales representative for Minturn Nut Company. “There are variable price points depending on the carrier, but we’re seeing prices go up across the board. South Korea has seen the biggest leap; you used to be able to get there for $500-$700 but this year I’ve seen it as high as $3,000.”
Administrative costs are going up
While these costs aren’t as obvious as the direct shipping costs, the increased time it takes to move product is costing more. Nearly all handlers reported a significant increase in administrative time associated with getting a container shipped. Overall, there was an average cost increase of 44% per container, with each consignment taking nine extra staff hours to complete.
Storage costs are going up
Last year’s record-setting almond crop, supply backups and the inability to predict product movement has led to an unanticipated, yet critical issue — lack of warehouse space. Many handlers indicated they have been forced to build or rent storage space to accommodate slow-moving supply. Additionally, the lengthened storage time has required handlers to implement measures to ensure product quality and safety, with nearly all survey respondents reporting increased costs associated with these measures.
The survey results compiled by the Almond Board’s GTRA staff summarize the financial sting felt industry-wide. Simply put, costs are up for handlers and prices are down for growers. In some cases, contracts have been canceled or renegotiated. The lack of cash flow is creating trouble for some growers, with last season’s progress payments delayed and this season’s production costs right on schedule – and higher than previous years.
A number of strategies may help alleviate the congestion at ports, including USDA’s planned “pop up” container yard for agricultural commodities at the Port of Oakland and the recently increased weight limits for trucks carrying goods in and out of ports. Those in the agriculture sector are working together to find solutions. Densel reported, “Despite challenges, the almond industry has continued to adapt and find novel solutions to unprecedented problems. Every step we take in the right direction is moving almonds closer to their final destination.”
