One thing that really bothers me is waiting in line to buy a product. When people want to buy your products, take their money as quickly as you can, or they will change their mind. The problems we see in our new COVID economy boil back to one thing: labor.

We have a distribution crisis, and we’ve been spoiled by companies like Amazon and online merchandising—order today and get it tomorrow, or even the same day. I think the race to be the quickest distributor has created the problem of being the consistent distributor.

We have a transportation and distribution problem that is impacting global trade. We’ve all heard the stories of container ships backed up 70 deep to get unloaded on West Coast ports. Businesses don’t have consistent access to components to operate their business because of transportation.

This made me think about the livestock transportation business and the fall run of cattle to market. I was told by several video reps that trucking hasn’t been a problem, especially with forward video contracts. Trucking is generally scheduled several weeks ahead. Then I’ve been told it might be a problem with the large calf runs going through auction markets. The trucks need to haul those cattle within a day or two before they start receiving the next week’s offering. Some of these country markets are seeing runs up to 6,000 head. There are a lot of cattle trucks on the road now.

But take the labor issue to the packing plant: Labor has been that industry’s nemesis forever, and the pandemic made it worse. Now we’re getting inconsistent packing plant utilization, keeping consumer beef prices high. Packers run their own fleets of trucks and don’t appear to have a problem getting to distributors. Some distributors may not be getting all the beef they order because of production issues—again, labor.

It’s ironic that beef exports have been setting new records in volume and price. Clearly the world is developing a taste for grain-finished beef. But, with this container shipping issue, how are they getting our products moved overseas?

Dan Halstrom, president and CEO of the U.S. Meat Export Federation, said that it has been an issue getting beef exported, particularly in Asia. China has grown into a major destination, and for the most part imports frozen products, which hasn’t been as difficult. However, they have refused some shipments because they took too much time to make the journey—like 10 weeks, which is a long time for frozen products. In September, it took an average of 73 days for shipments to reach their destination.

Japan and Korea are a bit more difficult because they import chilled products, which might have a three-week delivery window. Exporters have had to get creative to have products delivered, Halstrom said.

The Biden administration has jumped into the shipping dispute. Exporters have been complaining about container ship operators. The Federal Maritime Commission, the U.S. agency that regulates ocean commerce, announced they will investigate complaints from U.S. exporters and truckers about shady business practices from foreign shipping carriers, such as operating in alliances.

On Oct. 11, 76 groups representing ag export commodity groups sent a letter to the Biden administration, complaining about the shipping companies’ burdensome rules and refusals to accept loads going back to China and back-hauling empty containers for quick turnarounds of Asian goods, which are currently Christmas things. Apparently, ag commodities take longer to unload and increase costs.

The groups want the government to intervene with more regulatory efforts, and they are asking the Justice Department to get involved. A new Ocean Shipping Reform Act HR 4996 has been proposed, which is to address systemic supply chain and port disruption issues, including charges shippers receive for demurrage and detention, which are penalties for not picking up cargo on time and not returning empty containers. The ships earn revenue for an inefficient system.

The Biden administration’s quick fix to the problem was getting everyone to agree to operate the ports 24/7. I honestly can’t believe these ports haven’t operated 24/7 in the first place. However, it’s a heavily unionized industry. Again, our problem as a nation is putting people back to work. This COVID drama has been politicized beyond belief and has some folks very scared.

As always, we must learn to do more with less and deal with inflation at the same time. Keep praying for any kind of moisture. — PETE CROW

What do you think?


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