Washington Insider -- Wednesday

China Port Woes Backing Up Global Shipping

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

Republicans on Senate Panel Seek More Explanation From EPA On WOTUS

Republican members of the Senate Environment and Public Works Committee are asking EPA and the U.S. Army Corps of Engineers for the review the agencies said was conducted which prompted them to conclude that the Trump administration's Navigable Waters Protection Rule needed to be repealed and replaced.

"After the administration's continued commitments to transparency, engagement, and communication with stakeholders and Congress on this issue, the lack of transparency surrounding the decision to abandon this legally defensible and environmentally sound rule is disheartening," the lawmakers said in the letter to EPA Administrator Michael Regan and acting Assistant Secretary of the Army for Civil Works Jaime Pinkham.

The lawmakers said the administration has not provided its analysis to back up their claims the Trump-era rule caused "significant environmental damage" and "ongoing environmental harm" and that it faced "implementation challenges."

They are asking for specifics of the harm, damage and implementation issues and information on the 333 projects that did not require a permit under the Trump rule but would have under the Obama-era Waters of the U.S. (WOTUS) rule. The lawmakers are seeking a response by July 5.

Two US Facilities Delisted From Exporting To Mexico

USDA's Food Safety and Inspection Service (FSIS) said that the Smithfield Foods plant at Tar Heel, North Carolina, and the Rava Forwarding facility in Laredo, Texas, have been delisted as plants eligible to ship products to Mexico.

FSIS said the Smithfield facility was delisted June 16 relative to slaughter, boning, cut up, grinding, and processing pork, while the Rava Forwarding cold storage facility was delisted June 18. The facility is listed as cold storage for beef, poultry, pork, bison, sheep and wild game.

The Smithfield situation involved Mexican concerns over quality of a specific lot of hog skins sold to a third-party company that were eventually exported to Mexico, according to Keira Lombardo, Smithfield chief administrative officer. "We have conducted a thorough internal inquiry and have determined that the issue originates with the third-party company, not with Smithfield nor the facility," Lombardo said.

Reuters reported that Mexico's health safety agency Senasica was reviewing the matter.

Washington Insider: China Port Woes Backing Up Global Shipping

Shipping issues have again roiled the global transportation market, with impacts emanating from one area of the world -- China. This time, the bottlenecks in China and not the Suez Canal.

While global demand for goods produced in Asia is one factor, the New York Times reported that problems in the third largest container port in the world of Shenzhen is making the problems even worse. "The shipping delays are related to the Chinese government's stringent response to a recent outbreak of the virus," the Times said. "Shenzhen, with a population of more than 12 million, has had fewer than two dozen locally transmitted coronavirus cases; city health officials have linked them to the Alpha variant, which was first identified in Britain."

What is key is that the China has ordered testing of all 230,000 that live hear the Yantian container port where the first case was found May 21. But what is really snarling the system? Contact between port employees and sailors has been banned. "The city has required port employees to live in 216 hastily erected, prefabricated buildings at the docks instead of going home to their families every day," the Time said.

The situation has resulted in the port capacity to handle containers being very strained, still at 30% below its capacity as of last week. State media in China has said that it could take the rest of the month before a full recovery can be seen.

However, the times quoted Tim Huxley, the chairman of Mandarin Shipping which is based in Hong Kong, it could take the rest of the year to short out all the shipping delays at Yantian and elsewhere.

Already, scores of ships have been anchored off Shenzhen and Hong Kong with wait times to get to the dock at 16 days for the Yantian container port.

While the Yantian port had halted loading export containers for six days early in June, the problems have continued. The situation is now causing global delays similar to those seen in the Suez Canal situation where the Ever Given ran aground and blocked shipping for a week.

This has sent shipping rates skyrocketing. "The average cost of shipping a 40-foot container from East Asia to Europe or North America has roughly quadrupled in the past year," the Times noted. "Rates have soared this month with the Yantian difficulties."

Within China there are also impacts being seen. The Shenzhen Daily reported that an international logistics company in the Yantian District was hit by the delays and it faced penalties and fines for the delays at the port. The China Council for the Promotion of International Trade (CCPIT) Shenzhen issued a proof letter of limited service at the port, which the report said lessened the company's liability for the delay; CCPIT Shenzhen said that it has handled 2,022 business-related proof documents, the report noted.

The Suez Canal situation backed up a lot of container shipping around the globe and now the situation in China is expected to further delay a return to normal. But even as shipping issues wane there is still the matter of getting cargoes unloaded at destination ports like Los Angeles or Long Beach.

The strains on the ports there are from the heavy volume of containers arriving which is taxing systems to move those goods from the port inland. Similar situations are being reported in China as getting goods onloaded and offloaded has become a challenge.

This is one more challenge for agricultural exports. Containers have already become a bottleneck issue for agriculture, with the Federal Maritime Commission opening an investigation into companies opting to ship empty containers back to China and other Asian destinations so that they can more quickly return with goods in demand from U.S. consumers. But this latest snag in China has probably greatly reduced the benefit that shippers expected to reap by not hauling ag cargoes.

So we will see. Agricultural interests may feel somewhat relieved that they might not be as impacted as they could otherwise be, but it still represents the challenges that the increasing focus on U.S. ag exports. And the shipping situation is one that bears watching closely, Washington Insider believes.

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