Agriculture Secretary Tom Vilsack announced plans June 16 to increase capacity for exporting chilled and frozen agricultural commodities at the Port of Houston in Houston, Texas, to help improve service for shippers of U.S. grown agricultural commodities. In addition, USDA announced an expansion of its existing partnership with the Northwest Seaport Alliance to enhance access to a 16-acre “pop up” site.
USDA is partnering with the Port of Houston to lease additional chassis, used to position and store containers while waiting for vessels to arrive, enabling the port to fully utilize its capacity for refrigerated shipping or also known as “reefer” containers. USDA is taking action to increase capacity for U.S. agricultural exports and ensure delays or insufficient capacity do not restrict exports. The Port of Houston is the public port handling over two-thirds of the Gulf of Mexico’s container cargoes – the sixth busiest container gateway in the United States.
The NWSE pop-up site will accept either dry agricultural or refrigerated containers for temporary storage at NWSA in Tacoma to reduce operational hurdles and costs, so they can more quickly be loaded on ships at the export terminals. This announcement builds on the existing partnership with the NWSA at the Port of Seattle announced on March 18. The NWSA includes the marine cargo operations of the ports of Seattle and Tacoma and is the fourth-largest container gateway in the United States.
“American farmers and ranchers depend on a reliable and efficient transportation system to move their products to market,” says Vilsack. “As part of the Biden-Harris administration’s creative approaches to improve port operation, we are collaborating with partners in the supply chain to adapt and overcome challenges facing agriculture. USDA is pleased to announce the partnership with the Port of Houston and the expanded collaboration with NWSA to further ease port congestion. Through these investments, we continue to deliver on our promise to bolster the supply chain and support American-grown food and fiber.”
Port of Houston
Beginning earlier this year, Port Houston teamed with Frozen Protein Shipping Alliance to implement measures to address supply chain impacts. The program announced by USDA helps do just that to improve service for shippers of U.S.-grown agricultural commodities and others.
Foreign sales of U.S. poultry, beef, and pork through the Port of Houston totaled a half-billion dollars in 2021, but millions in sales are at risk due to limited availability of equipment, specifically chassis, at the port to move and position reefer containers while waiting for the vessels to arrive. The American agriculture sector, particularly the meat industry, has expressed significant concern in response to these limitations, especially as challenges at west coast ports have shifted some volume to the gulf and eastern ports. These impacts reverberate across the supply chain, impacting not only exporters, but also producers in States throughout the South and Southwest.
“This new program will help better match chassis supply with storage demand,” says Port Houston Executive Director Roger Guenther.
Agricultural products in reefer containers are typically stored on chassis at the Port of Houston’s wheeled-container facilities. Unfortunately, chassis have been in short supply over the last two years, reducing the port’s capacity to handle chilled or frozen agricultural exports. While the port is preparing for a longer-term investment in a rack system, the lack of a dedicated pool of chassis at this time has forced the port to “ground” the reefers. This decision, made out of necessity, adds inefficiency due to the extra time and steps involved in moving reefers off and on chassis before being put on the vessel. Additionally, the current electrical system of plugs is half as efficient with grounded containers as fewer plugs are accessible. At the same time, ongoing supply chain issues have made it difficult to pivot to short-term rentals of chassis.
Using Commodity Credit Corporation funds made available to address market disruptions in September 2021, the Agricultural Marketing Service will cover 50% of the cost of obtaining and leasing chassis at the Port of Houston during the first year of its five-year lease of an additional 1,060 chassis. USDA funding will help manage the risk of the investment and ensure the port is able to fully utilize its current capacity for reefers and avoid the risk of turning away or delaying exports. USDA says this partnership will ensure agricultural companies and cooperatives are able to export their commodities through the port and avoid costly delays or capacity constraints.
Northwest Seaport Alliance
Congestion-induced impacts to vessel schedules and prioritization of returning containers empty to Asia have significantly raised barriers for exporting agricultural commodities in containers, resulting in lost markets and disappointed customers. The Northwest Seaport Alliance has seen a nearly 30% decline in the export of agricultural commodities in the last six months of 2021 and the ratio of loaded versus empty container exports has shifted to predominately empty containers since May 2021.
In Tacoma, a 16-acre existing near-dock facility “pop up” site will be used to accept either dry agricultural or reefer containers for temporary storage at NWSA in Tacoma to reduce operational hurdles and costs so containers can more quickly be loaded on ships at the export terminals.
“Over the past year, The Northwest Seaport Alliance has been working closely with ag exporters to help mitigate supply chain challenges,” states Ryan Calkins NWSA co-chair and Port of Seattle Commission president. “We appreciate Secretary Vilsack’s leadership and look forward to this pilot program reducing costs for ag producers and helping bring more U.S. exports to foreign markets.”
“In partnership with PCMC, the NWSA has opened more than 60-acres of near-dock storage across our gateway to reduce port congestion and increase export opportunities,” adds Deanna Keller NWSA managing member and Port of Tacoma Commission vice president “The partnership with the USDA will further our efforts and provide needed relief for ag producers in our region.”
FSA payments available
The Farm Service Agency will provide payments of $200 per dry container and $400 per reefer container to help cover the additional logistical costs of moving the container twice, first to the preposition site and then to the terminal loading the vessel, along with the cost of temporary storage. The NWSA “pop-up” site itself does not require USDA cost-share assistance as this site already has handling equipment and reefer plugs.
FSA will make monthly direct payments to eligible agricultural companies and cooperatives on a per-container basis using the Port of Tacoma based upon the type of shipping container—dry filled containers and reefer filled containers. The site will have the ability to pre-cool refrigerated shipping containers to receive perishable commodities.
To apply, applicants must complete form FSA-862, Commodity Container Assistance Program (CCAP) Application according to FSA-862 instructions and submit the form to the FSA National Office by email to [email protected]. Payments will be made in arrears and verified with terminal records. A Unique Entity ID (12 alphanumeric characters assigned by SAM.gov) is required. Applicants that wish to receive payment by direct deposit must complete SAM.gov registration online at https://sam.gov/content/home and provide bank account information. Applicants may submit applications on a monthly basis, but all applications must be submitted by Jan. 31, 2023.
FSA will make payments to eligible owners or designated marketing agents of U.S. agricultural commodities based on the number of eligible shipping containers utilized from March 1, 2022, through Dec. 31, 2022, from the Port of Oakland and NWSA to ship agricultural commodities to their designated markets on container ships. Eligible commodities include agricultural commodities (other than tobacco) which are grown or produced in the United States for food, feed, or fiber, and products made from those commodities, including certain forestry products.
Visit the Notice of Funds Availability for more information on applicant eligibility and how to apply.