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A Logistical Nightmare?


By Mark Lange
National Cotton Council

The National Cotton Council joined an alliance that is addressing a troubling transportation dilemma – one that is hampering the flow of U.S. agricultural commodities, including raw cotton and cottonseed, both domestically and overseas.

What are the issues?

A number of transportation issues are undermining the competitiveness of today’s export-oriented U.S. cotton industry. That includes rail access and constrictions placed on exports by a shortage of cargo ships and a lack of expedient access to shipping containers.

Regarding water transit, the NCC is closely monitoring an array of port and ocean vessel container usage fees being imposed for reasons ranging from higher fuel costs to the fact that commodity exports are not a “back haul” any longer. Further, there is an overall shortage of containers due to: 1) the weak U.S. dollar combined with the growing Asian economies that have increased the demand for U.S. goods in general, thus pressuring available container space, 2) a cooling U.S. economy that caused ocean shipping lines to pull as much as 30 percent of their vessels and a commensurate number of containers from their Asia to West Coast routes and 3) the physics involved with a ship that carries 8,000 containers of lighter weight goods from Asia to the United States not being able to return with 8,000 containers of heavier U.S. exports, such as agricultural commodities. Along with the ocean shipping concerns is the issue of inadequate competition and unfair rates from U.S. railroads.

How is the situation being addressed?

The Agriculture Transportation Coalition (AgTC), to which the NCC and 59 other organizations belong, is considering a number of options. One includes increased communication with federal agencies and Congress, including the agreement to testify at an upcoming House subcommittee hearing to review international ocean shipping and the Shipping Act of 1984. In the meantime, Rep. Ken Calvert (R-Calif.) has proposed legislation that includes a model for a value-based fee for ocean vessel container usage. The intent is to ensure that low-margin products, such as agricultural exports, would not be priced out of the global marketplace.

Congressional hearings also have been held on legislation, recently approved by the House Judiciary Committee, to end the exemption from antitrust law for railroads. The measure would allow private parties and state attorneys general to seek injunctions against railroad carriers for anti-competitive actions. The bill also would strike all antitrust exemptions for mergers, acquisitions, collective rate-making and coordination among railroads.

In addition, the new Congressionally-approved Farm Bill includes a call for an immediate rural transportation issues study regarding agricultural products movement to be conducted jointly by the agriculture and transportation secretaries. It will examine the importance of freight transportation, including rail, truck and barge to, among other things, the movement of agricultural commodities and products to market and the sufficiency of the transportation capacity/transportation system competition, the reliability of transportation services and the reasonableness of transportation rates. The study results are to be reported to Congress not later than a year after the Farm Bill becomes law.

Mark Lange is president and chief executive officer for the National Cotton Council of America. He and other NCC leaders contribute columns on this Cotton Farming page.

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