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July 3, 2023

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www.joc.com Letter from the Editor 4 Journal of Commerce | July 3, 2023 Journal of Commerce (USPS 279 – 060), ISSN 1530-7557, July 3, 2023, Volume 24, Issue No. 14. Journal of Commerce is published biweekly except the last week in December (printed 25 times per year) by JOC Group Inc., 55 Water St., 39th Floor, New York, N.Y. 10041. Subscription price: $595 a year. Periodicals postage paid at New York, N.Y., and additional mailing o ices. © All rights reserved. No portion of this publication may be copied or reprinted without written permission from the publisher. POSTMASTER: Please send address changes to Journal of Commerce, Subscription Services Department, 55 Water St., 39th Floor, New York, N.Y. 10041. Executive Editor: Mark Szakonyi 202.872.1234, mark.szakonyi@spglobal.com Managing Editor: Benjamin Meyer 916.716.6272, benjamin.meyer@spglobal.com Managing Editor: Kevin Saville, 212.488.4282, kevin.saville@spglobal.com Senior Editors: William B. Cassidy Trucking and Domestic Transportation 202.872.1228, bill.cassidy@spglobal.com Bill Mongelluzzo, West Coast 562.428.5999, bill.mongelluzzo@spglobal.com Eric Johnson, Technology 213.444.9326, eric.johnson@spglobal.com Janet Nodar, Breakbulk and Heavy Li 251.473.2742, janet.nodar@spglobal.com Greg Knowler, Europe +44.797.679.8770, greg.knowler@spglobal.com Ari Ashe, Southeast Ports, Intermodal Rail 202.548.7895, ari.ashe@spglobal.com Associate Editor, Northeast and Gulf: Michael Angell, 646.505.4712, michael.angell@spglobal.com Associate Editor: Teri Gri is, 919.890.5602, teri.gri is@spglobal.com Research Analyst, Project and Breakbulk Cargo: Susan Oatway, FICS, +44.7930.411659 susan.oatway@spglobal.com Senior Contributor: Cathy Morrow Roberson, 732.730.2533, cathy.morrowroberso@spglobal.com Data Analyst: Marcin Lejk, +44.58.741.6270, marcin.lejk@spglobal.com Shipper Engagement Manager, North America: Tammy Auld, 832.603.9163 tammy.auld@spglobal.com Shipper Engagement Manager, Breakbulk: Diana Hamm, 832.499.7368, diana.hamm@spglobal.com Senior Editor, Special Projects: Alessandra Gregory Barrett, 860.248.5238, alessandra.barrett@spglobal.com Senior Associate Editor, Special Projects: Ariane Pepsin, 215.789.7478, ariane.pepsin@spglobal.com Special Projects Coordinator: Amanda Hunter, 212.205.1226, amanda.hunter@spglobal.com Senior Designer: Sue Abt, sue.abt@spglobal.com Associate Production Manager: Denise Shoukas, denise.shoukas@spglobal.com Designer: Hannah Kidd, +44 203 253 2134, hannah.kidd@spglobal.com Sales: Cindy Cronin, Director APAC sales, 954.260.6061 Jean Gibbons, Senior Sales Executive West Coast, FL, GA sales, 706.469.7160 John Knowles, Senior Sales Executive EMEA, AU sales, +44.777.997.4677 Allyson Marek, Senior Sales Executive Northeast sales, 862.754.8012 Elaine Nosaka, Senior Sales Executive VA, NC, SC, Canada sales, 703.447.9555 Judy Welp, Senior Sales Executive Midwest, Gulf, Latin America sales, 512.284.2878 For Magazine Subscription Customer Service: www.joc.com/help 55 Water St., 39th Floor, New York, N.Y. 10041 Peter Tirschwell, Vice President-Shipping Intellience, S&P Global Chris Brooks, Executive Director-Shipping Intelligence, S&P Global Carmen Verenna, Manager, Production ©2023 Journal of Commerce — All Rights Reserved For more information, visit our website, www.joc.com. Mark Szakonyi which is why several showed up to the recent Agriculture Transportation Coalition's (AgTC) annual gathering in Tacoma. While import rates are still far more than double outbound rates, as refl ected in various indices, the latter are still depressed. At roughly $1,200 per FEU from Asia to the US West Coast, container spot rates are down nearly 70% from a year ago, according to the S&P index. Thus, carriers need laden exports since the round-trip eco- nomics have changed. Slowly declining shipments There's less export volume to be had, however. Speaking at an industry event in Georgia, Stuart Sandlin, presi- dent for North America at Hapag-Lloyd, said total US export volumes so far in 2023 were down about 5% compared to the same period of last year. Still, "this year, we're focused on export markets, [and Hapag-Lloyd volumes are] actually up 5% year on year," he said. Growth in outbound volumes from the US to Asia has been fl at in recent years, thanks to a strong US dollar, Chinese tari s and competition from agricultural giants such as Brazil. In the lead-up to the passage of the Ocean Shipping Reform Act of 2022 (OSRA-22) last year, some US agricul- tural shippers went as far as to tell US legislators they would have exported more if not for container lines refus- ing to accept their cargoes. There were few, if any, such grumbles at the recent AgTC event. Total US agriculture exports inched up just 0.3% annually on average in the fi ve years ending in 2022, according to PIERS, a sister product of the Journal of Commerce within S&P Global. Within the same period, paper and forest prod- ucts and recyclable exports fell 2% and 10.2%, respectively. Chemical exports have been a rare growth engine for overall outbound volume, rising 4.3% on a fi ve-year compound growth rate ending in 2022. US EXPORTERS, DOMINATED by groups that ship lower-value goods and com- modities, have been enjoying a relative plunge in outbound container rates since the summer of 2021. After three years of import-driven disruption that drew howls of complaints from export- ers and led to the passage of broad shipping reform last year, that can feel like relief. Yet, there's budding concern among some shippers that outbound rates are now too low. Unsustainable rates in terms of ocean carriers' break- even operating costs recall memories of past cycles when too-low paying cargo was left on the docks and service levels fell in parallel with ocean carrier profi tability. Importantly, there's no regulation requiring an ocean carrier, much less any company, to accept business at a loss. That leaves little path for Congress, if it found the appetite, to further try to rectify the prior complaints of some exporters of being refused booking, often because the ocean carriers won't take on the costs of repositioning a container for outbound loads. Container spot rates from the US West Coast to Asia in mid-June were around $500 per FEU, down from $1,150 in early May and down more than 40% from a year ago, according to S&P Global Commodity Insights. Major shippers are being quoted far lower rates, with two saying they've been o ered FEU rates out of the US East Coast to Asia for less than $250. "I've never been taking so many calls than in the last six weeks," one of the sources, a logistics manager, told the Journal of Commerce. Ocean carriers have good reason to be hungry for export business, Chasing exports Continued on page 6 "This year, we're focused on export markets."

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