May 2, 2025 • 20 mins
A tug-of-war is brewing between building America's shipbuilding capacity and maintaining the competitiveness of U.S. agricultural exports. As Mike Steenhoek, Executive Director of the Soy Transportation Coalition, explains, this tension stems from recent USTR actions addressing Chinese dominance in global shipbuilding—a position China achieved through 25 years of focused development to capture over 50% of vessel production worldwide.
While promoting domestic shipbuilding represents a worthy national goal, Steenhoek argues the implementation timeline creates impossible expectations for critical export industries. "I'd rather have government policy be predictably good than sporadically great," he notes, highlighting how short-term trade disruptions often lead to permanent shifts in global supply chains. When the 2018-2019 trade dispute with China redirected agricultural purchases toward Brazil, it accelerated Chinese investment in Brazilian infrastructure—investments that remain in place regardless of future U.S.-China relations.
The immediate effects of current policies are already visible at American ports. The Port of Los Angeles projects a 35% decrease in vessel arrivals compared to last year, with retail inventory shortages expected within 5-7 weeks. For agricultural exporters, the situation threatens both immediate access to shipping capacity and long-term market relationships. When fees remain on vessels both built and operated by Chinese entities—vessels that currently transport substantial volumes of U.S. grain—the available shipping pool shrinks while export demand remains constant, inevitably driving up transportation costs. As Steenhoek aptly summarizes using an aviation metaphor: building domestic shipbuilding capacity requires a runway length appropriate for takeoff, not an aircraft carrier deck that sends the economy plunging into the ocean.
Subscribe now to hear more conversations examining how transportation and trade policies affect the competitiveness of American agriculture.
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Episode Transcript
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Sarah Muirhead (00:07):
The effort to promote US shipbuilding is a
laudable goal, but would requirean extraordinary long runway in
order to achieve.
The essential question,therefore, is what is the
appropriate length of a runwaythat will be necessary to
achieve the goal withoutpenalizing other made-in-America
industries, such as agriculture?
Welcome to Feedstuffs in Focus,our podcast taking a look at
(00:30):
the big issues affecting thelivestock, poultry, grain and
animal feed industries.
I'm your host, Sarah Muirhead.
On today's episode, MikeSteenhoek, Executive Director of
the Soy TransportationCoalition, joins us to discuss
the proposed actions by USTR andwhat that could mean to the US
farmers and their ability tocompete in the international
(00:53):
marketplace.
Lots going on out there, Mike,with the tariffs and the trade
discussions and all of that, butlet's start with the USTR's
shipbuilding rules.
Where are we at at this pointwith restoring and promoting US
shipbuilding and ending theChinese shipbuilding dominance?
Where are we at in all of that?
Give us a quick update, if youwould.
Mike Steenhoek (01:16):
Yeah, so all of this really originated in last
year, with a number ofplaintiffs submitted to the US
Trade Representative Office toinvestigate Chinese shipbuilding
and whether that country hashistorically engaged in a number
of unfair practices in order tostimulate that industry.
And clearly, since the year2000, so over the last 25 years,
(01:39):
it has been an industry thatthe Chinese have heavily
emphasized.
It's something they want to bevery influential in, and so this
and the results speak forthemselves Now over 50 percent
of ocean vessels are producedand manufactured in China.
Investigation and they came tothe conclusion that Chinese
(02:06):
activity has artificiallystimulated that industry to the
detriment of the US economy, andso they made a number of
decisions that were originallyadvertised and communicated to
the public in February of thisyear, and they really kind of
fall into two baskets.
One is to impose some punitivemeasures on the Chinese
(02:31):
shipbuilding industry, and therewere a collection of fees that
were imposed on ships coming tothe United States that were
built in China or owned andoperated by Chinese entities.
And then there was also anothergoal was to try to stimulate US
shipbuilding.
And then there was also anothergoal was to try to stimulate US
shipbuilding, and so there wasan obligation that was
increasing with time for USexports to utilize ships
(02:53):
manufactured in the UnitedStates.
So it was really those were thetwo goals.
And then there's a commentperiod that was unleashed and
the comments really, with theexception of the plaintiffs and
other entities like them and theplaintiffs were unions that
were involved in US shipbuildingto some degree, shape or form,
(03:15):
With the exception of thoseinterest groups the feedback was
overwhelmingly negative thatthis would be very harmful to
importers, but then alsoexporters like US agriculture,
and our contention withagriculture was not, we don't
have an objection with the goal,the goal of stimulating US
shipbuilding.
(03:35):
That's a laudable goal.
But whenever you have a goalwhether it's a personal goal, a
company goal, a national goal,an industry goal, personal goal,
a company goal, a national goal, an industry goal the
elementary next question is whatis the appropriate
implementation period or timehorizon in order to achieve that
goal?
And that was the concern thatwe had is that these remedies,
(04:00):
these policies that were beingadvertised, were very punitive
and some of these fees that wereassociated with shipping very
punitive, and some of these feesthat were associated with
shipping.
Our concern was that, in theeffort to try to promote a made
in America industry,shipbuilding, you are going to
simultaneously harm other madein America industries
agriculture and others.
So we provided some veryconcerning feedback to that.
(04:23):
They amended the US TradeRepresentative Office recently
amended those policies and thoserecommendations.
They're considerably betterthan what they were originally
were, but there's still someareas of concern to us that
there are some of theseadditional fees that do remain.
A lot of it is exempted now, soa step in the right direction,
(04:43):
but it's still there's some realconcerns that we have that
there are some of these feesstill involved with shipping.
When it comes to governmentpolicy on promoting
transportation, I would like thegovernment to really focus on
subtraction math.
How can you reduce the cost ofgetting product from point A to
point B, particularly if it'sinternational, Not addition math
(05:04):
adding costs to our supplychain.
When you engage in subtractionmath, you make us more
competitive in the globalmarketplace.
When you do addition math,we're less competitive, and so
that still remains a concern forus.
Sarah Muirhead (05:16):
So right now you see it affecting profitability
of US farmers the way the rulesare currently standing at this
point, even though there's beensome initial concessions made.
Mike Steenhoek (05:27):
Yeah, and again, very much a step in the right
direction, but there's stillsome real challenges.
One of them is that they willexempt from these fees if it's a
Chinese-made vessel, if it'sowned and operated by a
non-Chinese entity, anotherEuropean country, a company or
what have you but they will notexempt from fees if it's a
(05:49):
Chinese-built vessel but it'sowned and operated by a Chinese
entity.
And there's a considerableamount of ocean vessels that
handle US soybeans and US grainserving our export market, that
do fit that category, that areowned and operated by Chinese
entities.
And so what you're going to dois, in order to avoid that fee,
(06:10):
those vessels are going toessentially be removed from the
pool of viable pool for oceanvessels to transport US
commodities.
So you have a smaller pool, butnow you're going to have a
given amount of freight thatstill remains competing for that
pool, and the inevitableoutcome of that will be higher
(06:31):
rates when it comes totransporting our exports.
And so that's the aircraftcarrier.
Well, the result of that wouldbe that 747 would fall into the
(06:54):
ocean.
You need about 9,000, 10,000feet of runway for a 747 to be
able to take off.
The fact that that 747 would bein the ocean is not the fault
of the 747.
It's not the fault of theaircraft carrier.
The fault would be in the factthat there was an unrealistic
expectation imposed on the two,and that's kind of.
Again.
The concern that we have is notthat we don't have a problem
(07:17):
with the goal of trying topromote US shipbuilding, it's
just that there's an unrealisticexpectation in order to achieve
that, the time horizon is notnearly appropriate, and so now
again, in the efforts of tryingto promote that industry, you're
going to be harming otherindustries like agriculture.
Sarah Muirhead (07:35):
What is a good time frame if we're to move in
that direction?
I mean we're talking probablymultiple years, correct to move
a lot of the shipbuilding hereto the US.
Mike Steenhoek (07:44):
Yeah, I mean it's in the years kind of
category.
And so you know, consider thatyou first have to determine.
You know, if you're going totry to increase your shipping
capacity, you need to haveshipyards.
In order to have shipyards, youhave to know where you're going
to put them and that's theavailable land to do that.
You first have to assess thatand then, of course, you have to
(08:04):
build the shipyards.
So you think about the times inorder it takes to get to that
(08:25):
point.
You know China with its centralplanning, you know regime.
They got to where they are frombasically minimal amount of
shipbuilding to now being thedominant supplier, over 50%.
But that took them 25 years inorder to do that.
And that's with a central,centrally planned economy where
the government basically saysyou will do that.
And that's with a centrallyplanned economy where the
(08:45):
government basically says youwill do this, and without any
kind of environmental kind ofbarriers or obstacles that they
have to overcome in doing thingslike that.
So, yes, the answer to that isit's going to take years to be
able to achieve that, and sothat's the real concern that we
have.
Sarah Muirhead (09:02):
So let's talk about what's going on at the
ports.
We're hearing reports thatthere are not a lot of ships
that are coming in and thenumbers are down considerably,
even at some points beingnon-existent.
What are you hearing out there?
What's the situation as we lookat the ports?
Probably we're talking mostlyon the West Coast, but what are
(09:22):
you seeing?
Mike Steenhoek (09:23):
Yeah, and I was just seeing a report from the
port of Los Angeles, which isour number one port in the
United States in terms of volumeof containers that we handle
and you're able to project thatso you know where the ships
normally come from, and so inthis case, China is a big source
of that ships normally comefrom, and so in this case, China
(09:45):
is a big source of that.
We're seeing that there's verylittle vessels being loaded in
China with the US as itsdestination.
So you can just basically backup from that, knowing that
really, starting next week,you're going to see a major
downturn in the amount of oceanvessels arriving to the United
States, particularly from China.
Port of Los Angeles estimates a35% decrease from last year,
(10:10):
and then you kind of roll backfrom that that.
It will be about five to sevenweeks before you really see it.
Impact on department storeshelves, where you're seeing
less inventory, because it takestime for what gets unloaded at
a port to eventually make itsway into the retail channel, and
(10:33):
so that's kind of what peopleare estimating that you're going
to start seeing some noticeabledifferences when people go to a
department store or even agrocery store.
When people go to a departmentstore or even a grocery store.
Yeah, no one's arguing thatit's going to be a carbon copy
of what we experienced duringthe COVID pandemic, where you
(10:53):
just had empty shelves all overthe place, but it's going to be
something that's going to benoticeable unless there's some
kind of intervention or somekind of course change on what
we're seeing.
So you know, this is again.
This is something that it'sgoing to become more and more
real.
Right now it's kind of more ofa theoretical to a lot of people
, but with increasing time it'sdefinitely going to become more
(11:15):
real.
Sarah Muirhead (11:17):
And we know that transportation system all
depends not only on the shipscoming in but the ships also
taking things out as they comein.
So that's going to put a strain, I would imagine, on farmers.
From a commodity standpoint,there's not going to be those
ships that can take thosecommodities to other parts of
the world.
Is that what you're seeing, oris that not going to be a
(11:40):
concern?
Mike Steenhoek (11:41):
Yeah, it's going to be a significant concern.
So, for whether it's forsoybeans or soybean meal or DDGs
, most of that goes out in bulkvessels.
But there is a percentage ofthat that do go out via
containers and in order to beable to take advantage of that
supply chain option, you have tohave the front haul movement,
(12:05):
because we're the backhaulmovement back to Asia and other
countries, and so if all of asudden you're having a dramatic
decrease in imports coming intothe United States, there's going
to be a curtailed opportunityfor exporting back to some of
those other countries, and thisis going to be something that's
going to impact a lot ofdifferent aspects of agriculture
(12:26):
.
So I mentioned earlier thatsoybeans and other grains we use
a lot of bulk vessels.
But if you're in the meatexport industry and again the
domestic livestock is ourbiggest customer so if you have
an adverse impact on domesticlivestock and their ability to
(12:46):
ultimately export, you're goingto simultaneously harm US
soybean farmers.
So most of their exports go viarefrigerated containers, fresh
fruits and vegetables.
All of those exports utilizeshipping containers to be able
to serve their internationalmarkets Again, but it's all
predicated on having shipscoming to the United States in
(13:08):
the first place, deliveringconsumer goods that we buy at
various retail options, andthat's what we're seeing already
.
We're seeing a decrease in thatand that's only going to become
more augmented as time proceeds, unless there's some kind of
course change.
Sarah Muirhead (13:26):
What about from the trucking and rail standpoint
?
Are you anticipating any rippledown impacts from the shipping
situations in our ports thatwould also affect those entities
?
Mike Steenhoek (13:37):
Yeah, I mean, when it comes to supply chains,
it's very akin to a relay race,where you get a baton that gets
passed around the track and inthis case the baton is consumer
goods or it's freight that'sgetting passed around and it
gets handed off from oceanvessel to rail, from rail to
truck, and so if you're having,all of a sudden, a significant
(14:01):
decrease in imports coming tothe United States or exports
leaving from the United States,that's going to have a real
impact on rail service, ontrucking.
Those who are in the supplychain industry are very worried
about a significant decrease involume getting moved around the
(14:22):
country and there, you know,there's a lot of jobs in the
United States that are relatedto the supply chain industry.
So you know, clearly, you know,the trucking industry is very
concerned, the rail industry isconcerned and there's certain
reason for that.
Sarah Muirhead (14:40):
What else are you watching for soybean farmers
out there on the transportationshipping front?
Mike Steenhoek (14:46):
Yeah, I mean, the tariff issue is certainly a
notable one.
You know, farmers were amongthe earliest of international
entrepreneurs, because there wasthis recognition decades ago by
farmers that we as a countrycan grow more food than we have
the ability to consume, and sofarmers naturally turn their
(15:10):
attention to the internationalmarketplace, and they've worked
very diligently for years to tryto build and establish and
maintain these markets, and it'sworked out wonderfully, not
only for US agriculture but forthese international customers,
because many of them don't havethe ability to meet their own
protein and nutritional needs,and so it worked out really well
(15:32):
.
And so now, all of a sudden,you're having some real, you
know, changes being imposed onthat, and the concern that we
have is there's the short-termconcern.
And the concern that we have isthere's the short-term concern,
(15:54):
which isn't very sizable, butit's also the long-term concern
that is arguably even moremenacing to our industry trade
dispute with China.
What happened during that timeis that was a reason for Chinese
investment in Brazilianinfrastructure to receive a
really big shot of adrenaline.
(16:15):
Now that kind of investment inBrazilian infrastructure by
China had been occurring, but itjust got turbocharged with that
2018-2019 trade dispute that wehad, and now, all of a sudden,
they've invested China haveinvested billions of dollars in
Brazilian infrastructure, andeven if you have this great
reconciliation between the twocountries, the United States and
(16:35):
China, what China would say isyeah, I'm glad we're getting
along once again, but you knowall that billions of dollars of
investment in Brazil that wemade, yeah, we're going to
continue to use it.
And so you can have.
These temporary trade disputesresult in long-term change in
trading patterns, and that's oneof the real concerns that we
(16:57):
have is that you're providingincentive for that to occur, and
the United States has pridedourselves for years of being the
most cost-effective, reliable,dependable supplier of food on
the global marketplace.
That's a reputation that weachieved through lots of hard
work by farmers and others formany, many years, and now, all
(17:20):
of a sudden, that goodreputation is being questioned
right now.
Sarah Muirhead (17:24):
And now, all of a sudden, that good reputation
is being questioned right now.
Well, and it takes time toreset up an infrastructure.
If you're going to go, you knowyou haven't been shipping to
China.
You're going to go back toshipping to China.
Mike Steenhoek (17:44):
You got to get all the rail and the trucks and
everything back into play tomake that kind of a you know of
an infrastructure to make thatall happen.
Yeah, I mean, there's certainindustries.
You know when you're, whenyou're selling halfway around
the world, when you look out thewindshield of your, of your
industry, you don't just careabout what the next 50 feet will
provide.
You have to know what the nextmile, the next two miles, the
next 10 miles, what the forecastis for that, and so that's
(18:08):
really important is to have thatkind of certainty, that
predictability.
One of the things I oftenmention when it comes to
government policy and trying tosupport industries like
agriculture and others is thatI'd rather have government
policy be predictably good thansporadically great.
It doesn't do us a whole lot ofgood to have sublime government
(18:32):
policies and programs on Monday, wednesday and Friday if the
pendulum swings to reallychallenging policies and
procedures on Tuesday, thursday,saturday and Sunday.
You can't build an industryaround that.
You have to have thatpredictability, and so that's
(18:53):
something that we really doimplore our elected leaders to
really take into account In themidst of having some of the
challenges that you know welegitimately have some concerns
and some challenges betweencountries like the US and China
and some other countries aroundthe world.
But when you have disputes, Ithink it's always wise to also
(19:15):
consider within thisrelationship are there good
things that are happening thatare happening?
And if there are good thingsthat are happening, then let's
try to encourage and protect andeven fortify, improve what's
the good things that arehappening, while simultaneously
working to address thechallenges and the arguments
that may need to occur.
(19:37):
And one of the good thingsthat's happening and has been
happening is that you've got agroup of people called farmers
that are growing food and thatare helping supply the protein
and nutritional needs of avariety of countries, including
some countries that we are atodds with, including China.
That's a good thing.
We want to continue that.
We don't want to disrupt thatin any way.
So, again, it's my hope that wecan really, as a country, can
(20:01):
address some of these legitimatedisputes concerns that we have,
while protecting the goodthings that are happening.
And one of those good things atthe top of that list, in my
opinion, is farmers growing foodfor other countries.
Sarah Muirhead (20:15):
Our thanks to Mike Steenhoek, executive
Director of the SoyTransportation Coalition, for
joining us here today.
I'm Sarah Muirhead and you'vebeen listening to Feedstuffs In
Focus.
If you would like to hear moreconversations about some of the
big issues affecting thelivestock, poultry grain and
animal feed industries,subscribe to this podcast on
(20:35):
your favorite podcast channel.
Until next time, have a greatday and thank you for listening.
The effort to promote US shipbuilding is a
laudable goal, but would requirean extraordinary long runway in
order to achieve.
The essential question,therefore, is what is the
appropriate length of a runwaythat will be necessary to
achieve the goal withoutpenalizing other made-in-America
industries, such as agriculture?
Welcome to Feedstuffs in Focus,our podcast taking a look at
(00:30):
the big issues affecting thelivestock, poultry, grain and
animal feed industries.
I'm your host, Sarah Muirhead.
On today's episode, MikeSteenhoek, Executive Director of
the Soy TransportationCoalition, joins us to discuss
the proposed actions by USTR andwhat that could mean to the US
farmers and their ability tocompete in the international
(00:53):
marketplace.
Lots going on out there, Mike,with the tariffs and the trade
discussions and all of that, butlet's start with the USTR's
shipbuilding rules.
Where are we at at this pointwith restoring and promoting US
shipbuilding and ending theChinese shipbuilding dominance?
Where are we at in all of that?
Give us a quick update, if youwould.
Mike Steenhoek (01:16):
Yeah, so all of this really originated in last
year, with a number ofplaintiffs submitted to the US
Trade Representative Office toinvestigate Chinese shipbuilding
and whether that country hashistorically engaged in a number
of unfair practices in order tostimulate that industry.
And clearly, since the year2000, so over the last 25 years,
(01:39):
it has been an industry thatthe Chinese have heavily
emphasized.
It's something they want to bevery influential in, and so this
and the results speak forthemselves Now over 50 percent
of ocean vessels are producedand manufactured in China.
Investigation and they came tothe conclusion that Chinese
(02:06):
activity has artificiallystimulated that industry to the
detriment of the US economy, andso they made a number of
decisions that were originallyadvertised and communicated to
the public in February of thisyear, and they really kind of
fall into two baskets.
One is to impose some punitivemeasures on the Chinese
(02:31):
shipbuilding industry, and therewere a collection of fees that
were imposed on ships coming tothe United States that were
built in China or owned andoperated by Chinese entities.
And then there was also anothergoal was to try to stimulate US
shipbuilding.
And then there was also anothergoal was to try to stimulate US
shipbuilding, and so there wasan obligation that was
increasing with time for USexports to utilize ships
(02:53):
manufactured in the UnitedStates.
So it was really those were thetwo goals.
And then there's a commentperiod that was unleashed and
the comments really, with theexception of the plaintiffs and
other entities like them and theplaintiffs were unions that
were involved in US shipbuildingto some degree, shape or form,
(03:15):
With the exception of thoseinterest groups the feedback was
overwhelmingly negative thatthis would be very harmful to
importers, but then alsoexporters like US agriculture,
and our contention withagriculture was not, we don't
have an objection with the goal,the goal of stimulating US
shipbuilding.
(03:35):
That's a laudable goal.
But whenever you have a goalwhether it's a personal goal, a
company goal, a national goal,an industry goal, personal goal,
a company goal, a national goal, an industry goal the
elementary next question is whatis the appropriate
implementation period or timehorizon in order to achieve that
goal?
And that was the concern thatwe had is that these remedies,
(04:00):
these policies that were beingadvertised, were very punitive
and some of these fees that wereassociated with shipping very
punitive, and some of these feesthat were associated with
shipping.
Our concern was that, in theeffort to try to promote a made
in America industry,shipbuilding, you are going to
simultaneously harm other madein America industries
agriculture and others.
So we provided some veryconcerning feedback to that.
(04:23):
They amended the US TradeRepresentative Office recently
amended those policies and thoserecommendations.
They're considerably betterthan what they were originally
were, but there's still someareas of concern to us that
there are some of theseadditional fees that do remain.
A lot of it is exempted now, soa step in the right direction,
(04:43):
but it's still there's some realconcerns that we have that
there are some of these feesstill involved with shipping.
When it comes to governmentpolicy on promoting
transportation, I would like thegovernment to really focus on
subtraction math.
How can you reduce the cost ofgetting product from point A to
point B, particularly if it'sinternational, Not addition math
(05:04):
adding costs to our supplychain.
When you engage in subtractionmath, you make us more
competitive in the globalmarketplace.
When you do addition math,we're less competitive, and so
that still remains a concern forus.
Sarah Muirhead (05:16):
So right now you see it affecting profitability
of US farmers the way the rulesare currently standing at this
point, even though there's beensome initial concessions made.
Mike Steenhoek (05:27):
Yeah, and again, very much a step in the right
direction, but there's stillsome real challenges.
One of them is that they willexempt from these fees if it's a
Chinese-made vessel, if it'sowned and operated by a
non-Chinese entity, anotherEuropean country, a company or
what have you but they will notexempt from fees if it's a
(05:49):
Chinese-built vessel but it'sowned and operated by a Chinese
entity.
And there's a considerableamount of ocean vessels that
handle US soybeans and US grainserving our export market, that
do fit that category, that areowned and operated by Chinese
entities.
And so what you're going to dois, in order to avoid that fee,
(06:10):
those vessels are going toessentially be removed from the
pool of viable pool for oceanvessels to transport US
commodities.
So you have a smaller pool, butnow you're going to have a
given amount of freight thatstill remains competing for that
pool, and the inevitableoutcome of that will be higher
(06:31):
rates when it comes totransporting our exports.
And so that's the aircraftcarrier.
Well, the result of that wouldbe that 747 would fall into the
(06:54):
ocean.
You need about 9,000, 10,000feet of runway for a 747 to be
able to take off.
The fact that that 747 would bein the ocean is not the fault
of the 747.
It's not the fault of theaircraft carrier.
The fault would be in the factthat there was an unrealistic
expectation imposed on the two,and that's kind of.
Again.
The concern that we have is notthat we don't have a problem
(07:17):
with the goal of trying topromote US shipbuilding, it's
just that there's an unrealisticexpectation in order to achieve
that, the time horizon is notnearly appropriate, and so now
again, in the efforts of tryingto promote that industry, you're
going to be harming otherindustries like agriculture.
Sarah Muirhead (07:35):
What is a good time frame if we're to move in
that direction?
I mean we're talking probablymultiple years, correct to move
a lot of the shipbuilding hereto the US.
Mike Steenhoek (07:44):
Yeah, I mean it's in the years kind of
category.
And so you know, consider thatyou first have to determine.
You know, if you're going totry to increase your shipping
capacity, you need to haveshipyards.
In order to have shipyards, youhave to know where you're going
to put them and that's theavailable land to do that.
You first have to assess thatand then, of course, you have to
(08:04):
build the shipyards.
So you think about the times inorder it takes to get to that
(08:25):
point.
You know China with its centralplanning, you know regime.
They got to where they are frombasically minimal amount of
shipbuilding to now being thedominant supplier, over 50%.
But that took them 25 years inorder to do that.
And that's with a central,centrally planned economy where
the government basically saysyou will do that.
And that's with a centrallyplanned economy where the
(08:45):
government basically says youwill do this, and without any
kind of environmental kind ofbarriers or obstacles that they
have to overcome in doing thingslike that.
So, yes, the answer to that isit's going to take years to be
able to achieve that, and sothat's the real concern that we
have.
Sarah Muirhead (09:02):
So let's talk about what's going on at the
ports.
We're hearing reports thatthere are not a lot of ships
that are coming in and thenumbers are down considerably,
even at some points beingnon-existent.
What are you hearing out there?
What's the situation as we lookat the ports?
Probably we're talking mostlyon the West Coast, but what are
(09:22):
you seeing?
Mike Steenhoek (09:23):
Yeah, and I was just seeing a report from the
port of Los Angeles, which isour number one port in the
United States in terms of volumeof containers that we handle
and you're able to project thatso you know where the ships
normally come from, and so inthis case, China is a big source
of that ships normally comefrom, and so in this case, China
(09:45):
is a big source of that.
We're seeing that there's verylittle vessels being loaded in
China with the US as itsdestination.
So you can just basically backup from that, knowing that
really, starting next week,you're going to see a major
downturn in the amount of oceanvessels arriving to the United
States, particularly from China.
Port of Los Angeles estimates a35% decrease from last year,
(10:10):
and then you kind of roll backfrom that that.
It will be about five to sevenweeks before you really see it.
Impact on department storeshelves, where you're seeing
less inventory, because it takestime for what gets unloaded at
a port to eventually make itsway into the retail channel, and
(10:33):
so that's kind of what peopleare estimating that you're going
to start seeing some noticeabledifferences when people go to a
department store or even agrocery store.
When people go to a departmentstore or even a grocery store.
Yeah, no one's arguing thatit's going to be a carbon copy
of what we experienced duringthe COVID pandemic, where you
(10:53):
just had empty shelves all overthe place, but it's going to be
something that's going to benoticeable unless there's some
kind of intervention or somekind of course change on what
we're seeing.
So you know, this is again.
This is something that it'sgoing to become more and more
real.
Right now it's kind of more ofa theoretical to a lot of people
, but with increasing time it'sdefinitely going to become more
(11:15):
real.
Sarah Muirhead (11:17):
And we know that transportation system all
depends not only on the shipscoming in but the ships also
taking things out as they comein.
So that's going to put a strain, I would imagine, on farmers.
From a commodity standpoint,there's not going to be those
ships that can take thosecommodities to other parts of
the world.
Is that what you're seeing, oris that not going to be a
(11:40):
concern?
Mike Steenhoek (11:41):
Yeah, it's going to be a significant concern.
So, for whether it's forsoybeans or soybean meal or DDGs
, most of that goes out in bulkvessels.
But there is a percentage ofthat that do go out via
containers and in order to beable to take advantage of that
supply chain option, you have tohave the front haul movement,
(12:05):
because we're the backhaulmovement back to Asia and other
countries, and so if all of asudden you're having a dramatic
decrease in imports coming intothe United States, there's going
to be a curtailed opportunityfor exporting back to some of
those other countries, and thisis going to be something that's
going to impact a lot ofdifferent aspects of agriculture
(12:26):
.
So I mentioned earlier thatsoybeans and other grains we use
a lot of bulk vessels.
But if you're in the meatexport industry and again the
domestic livestock is ourbiggest customer so if you have
an adverse impact on domesticlivestock and their ability to
(12:46):
ultimately export, you're goingto simultaneously harm US
soybean farmers.
So most of their exports go viarefrigerated containers, fresh
fruits and vegetables.
All of those exports utilizeshipping containers to be able
to serve their internationalmarkets Again, but it's all
predicated on having shipscoming to the United States in
(13:08):
the first place, deliveringconsumer goods that we buy at
various retail options, andthat's what we're seeing already
.
We're seeing a decrease in thatand that's only going to become
more augmented as time proceeds, unless there's some kind of
course change.
Sarah Muirhead (13:26):
What about from the trucking and rail standpoint
?
Are you anticipating any rippledown impacts from the shipping
situations in our ports thatwould also affect those entities
?
Mike Steenhoek (13:37):
Yeah, I mean, when it comes to supply chains,
it's very akin to a relay race,where you get a baton that gets
passed around the track and inthis case the baton is consumer
goods or it's freight that'sgetting passed around and it
gets handed off from oceanvessel to rail, from rail to
truck, and so if you're having,all of a sudden, a significant
(14:01):
decrease in imports coming tothe United States or exports
leaving from the United States,that's going to have a real
impact on rail service, ontrucking.
Those who are in the supplychain industry are very worried
about a significant decrease involume getting moved around the
(14:22):
country and there, you know,there's a lot of jobs in the
United States that are relatedto the supply chain industry.
So you know, clearly, you know,the trucking industry is very
concerned, the rail industry isconcerned and there's certain
reason for that.
Sarah Muirhead (14:40):
What else are you watching for soybean farmers
out there on the transportationshipping front?
Mike Steenhoek (14:46):
Yeah, I mean, the tariff issue is certainly a
notable one.
You know, farmers were amongthe earliest of international
entrepreneurs, because there wasthis recognition decades ago by
farmers that we as a countrycan grow more food than we have
the ability to consume, and sofarmers naturally turn their
(15:10):
attention to the internationalmarketplace, and they've worked
very diligently for years to tryto build and establish and
maintain these markets, and it'sworked out wonderfully, not
only for US agriculture but forthese international customers,
because many of them don't havethe ability to meet their own
protein and nutritional needs,and so it worked out really well
(15:32):
.
And so now, all of a sudden,you're having some real, you
know, changes being imposed onthat, and the concern that we
have is there's the short-termconcern.
And the concern that we have isthere's the short-term concern,
(15:54):
which isn't very sizable, butit's also the long-term concern
that is arguably even moremenacing to our industry trade
dispute with China.
What happened during that timeis that was a reason for Chinese
investment in Brazilianinfrastructure to receive a
really big shot of adrenaline.
(16:15):
Now that kind of investment inBrazilian infrastructure by
China had been occurring, but itjust got turbocharged with that
2018-2019 trade dispute that wehad, and now, all of a sudden,
they've invested China haveinvested billions of dollars in
Brazilian infrastructure, andeven if you have this great
reconciliation between the twocountries, the United States and
(16:35):
China, what China would say isyeah, I'm glad we're getting
along once again, but you knowall that billions of dollars of
investment in Brazil that wemade, yeah, we're going to
continue to use it.
And so you can have.
These temporary trade disputesresult in long-term change in
trading patterns, and that's oneof the real concerns that we
(16:57):
have is that you're providingincentive for that to occur, and
the United States has pridedourselves for years of being the
most cost-effective, reliable,dependable supplier of food on
the global marketplace.
That's a reputation that weachieved through lots of hard
work by farmers and others formany, many years, and now, all
(17:20):
of a sudden, that goodreputation is being questioned
right now.
Sarah Muirhead (17:24):
And now, all of a sudden, that good reputation
is being questioned right now.
Well, and it takes time toreset up an infrastructure.
If you're going to go, you knowyou haven't been shipping to
China.
You're going to go back toshipping to China.
Mike Steenhoek (17:44):
You got to get all the rail and the trucks and
everything back into play tomake that kind of a you know of
an infrastructure to make thatall happen.
Yeah, I mean, there's certainindustries.
You know when you're, whenyou're selling halfway around
the world, when you look out thewindshield of your, of your
industry, you don't just careabout what the next 50 feet will
provide.
You have to know what the nextmile, the next two miles, the
next 10 miles, what the forecastis for that, and so that's
(18:08):
really important is to have thatkind of certainty, that
predictability.
One of the things I oftenmention when it comes to
government policy and trying tosupport industries like
agriculture and others is thatI'd rather have government
policy be predictably good thansporadically great.
It doesn't do us a whole lot ofgood to have sublime government
(18:32):
policies and programs on Monday, wednesday and Friday if the
pendulum swings to reallychallenging policies and
procedures on Tuesday, thursday,saturday and Sunday.
You can't build an industryaround that.
You have to have thatpredictability, and so that's
(18:53):
something that we really doimplore our elected leaders to
really take into account In themidst of having some of the
challenges that you know welegitimately have some concerns
and some challenges betweencountries like the US and China
and some other countries aroundthe world.
But when you have disputes, Ithink it's always wise to also
(19:15):
consider within thisrelationship are there good
things that are happening thatare happening?
And if there are good thingsthat are happening, then let's
try to encourage and protect andeven fortify, improve what's
the good things that arehappening, while simultaneously
working to address thechallenges and the arguments
that may need to occur.
(19:37):
And one of the good thingsthat's happening and has been
happening is that you've got agroup of people called farmers
that are growing food and thatare helping supply the protein
and nutritional needs of avariety of countries, including
some countries that we are atodds with, including China.
That's a good thing.
We want to continue that.
We don't want to disrupt thatin any way.
So, again, it's my hope that wecan really, as a country, can
(20:01):
address some of these legitimatedisputes concerns that we have,
while protecting the goodthings that are happening.
And one of those good things atthe top of that list, in my
opinion, is farmers growing foodfor other countries.
Sarah Muirhead (20:15):
Our thanks to Mike Steenhoek, executive
Director of the SoyTransportation Coalition, for
joining us here today.
I'm Sarah Muirhead and you'vebeen listening to Feedstuffs In
Focus.
If you would like to hear moreconversations about some of the
big issues affecting thelivestock, poultry grain and
animal feed industries,subscribe to this podcast on
(20:35):
your favorite podcast channel.
Until next time, have a greatday and thank you for listening.
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