eNews • June 7, 2019
Promoting a Cost-Effective, Reliable and Competitive Transportation System

US agriculture exporters accelerate focus on Southeast Asia

Containerized agricultural exports will remain the backhaul commodity of choice for ports and carriers for the foreseeable future, although market growth is shifting from Northeast Asia to Southeast Asia and the Indian subcontinent.

US exports of containerized cereals, cotton, fruits, nuts, vegetables, and grains, such as soybeans, totaled 1,465,462 TEU in 2018, slipping 0.1 percent from 2017. However, the compound annual growth rate (CAGR) over the past five years was 9.3 percent, according to PIERS, a sister company of JOC.com within IHS Markit.

Although US growers export agricultural products to much of the world, containerized agricultural commodities are largely a trans-Pacific cargo, with Northeast Asia, Southeast Asia, and the Indian subcontinent accounting for about 76 percent of total US agricultural exports to the world.

The trans-Pacific trades between Asia and the US West, East, and Gulf coasts are driven more by imports than exports, but ports and carriers look to agricultural shipments to help fill out their export portfolio and generate revenue for the backhaul. "It's the best way to get containers back to Asia," said Eric Woodie, trade analyst with the Illinois Soybean Association.

Agricultural products are susceptible to global events beyond the control of growers, including weather, currency fluctuations, tariffs, and environmental and quality restrictions. The slight dip in exports in 2018 reflected tariff issues in China and India, said Bruce Abbe, past president of the Midwest Shippers Association and strategic adviser for the Specialty Soya and Grains Alliance.

Exports of agricultural products to mainland China in 2018 slumped 24.5 percent from 2017. Year-over-year exports also declined 6.5 percent to Japan and 10.4 percent to South Korea but increased 16.4 percent to Taiwan, according to PIERS.

China's announcement May 13 that it will retaliate further against certain agricultural exports will have no significant impact in the short term because the damage has already been done, said Mike Steenhoek, executive director of the Soy Transportation Coalition. "Soybeans are already at 25 percent tariffs. We're already priced out of the market," he said. Although China made some soybean purchases in recent months during the negotiations with the US, they amounted to a fraction of what US exporters would have made if there were no tariffs, he said.

Southeast Asia has been fertile ground for US agricultural exports over the past five years. Containerized agricultural exports in 2018 increased 9.9 percent to Indonesia, 38.1 percent to Vietnam, 21 percent to Thailand, and 44.2 percent to the Philippines compared with 2014. Woodie said soybean exports to Southeast Asia increased about 40 percent the past five years.

Growth of agricultural exports to Southeast Asia and the Indian subcontinent is working to the advantage of East and Gulf Coast ports, which access those markets through the Suez Canal and Panama Canal, respectively. Containerized agricultural exports through Norfolk increased 17.3 percent in 2018 from 2014, and Houston's agricultural exports rose 29.7 percent. However, agricultural exports through Savannah decreased 4.4 percent from 2014, New York-New Jersey decreased 16.4 percent, and Charleston decreased 13.9 percent.

East and Gulf Coast ports are more diversified than West Coast ports, exporting sizable volumes to Latin America and Europe, as well. Agricultural exports to the Mediterranean in 2018 were down 6.3 percent from 2014. Agricultural exports declined 14.3 percent to northern Europe, 28.2 percent to Central America, 15.3 percent to the west coast of South America, and 35.6 percent to the east coast of South America from 2014.

As US agricultural exports increase in developing markets, such as Southeast Asia and the Indian subcontinent, shipping product in containers makes more sense because in some countries, demand is not great enough to support large shipments in bulk vessels. The trade is therefore seeing continued growth in transloading.

"We have seen increases in transloading soybeans and soybean meal for delivery to big users in major markets, such as Indonesia and Taiwan (for soybeans) and the Philippines and Indonesia (soybean meal)," Woodie said.

Abbe added that the exporters of specialty products, such as peas, lentils, and pulses say markets through Southeast Asia and the Indian subcontinent will continue to grow in the coming years as manufacturing jobs expand and the middle-class populations in those regions increase. Carriers welcome this development because it generates a two-way haul, with imports of consumer merchandise into the US and growing agricultural exports for the backhaul.

Source:JOC.com


The Soy Transportation Coalition is comprised of thirteen state soybean boards, the American Soybean Association, and the United Soybean Board. The National Grain and Feed Association and the National Oilseed Processors Association serve as ex-officio members of the organization.

Soy Transportation Coalition
1255 SW Prairie Trail Pkwy., Ankeny, Iowa 50023
Phone: (515) 727-0665 Fax (515) 251-8657
Email msteenhoek@soytransportation.org
Web www.soytransportation.org

Funded by the Soybean Checkoff