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Cash Market Moves             06/01 16:53

   Webinar Highlights Impact of COVID-19 on Global Logistics

   COVID-19 pandemic has decreased tonnage in maritime shipping, leading to 
blank sailings and an increase in airfreight volume.

Mary Kennedy
DTN Basis Analyst

   On May 21, the Washington International Trade Association (WITA) held a 
webinar to explore what trade policymakers can do to adapt to this new world 
and contribute with bold and meaningful initiatives. During the webinar, 
entitled "COVID-19 & Trade: Ports, Logistics, and Global Supply Chains," the 
panel discussed the impact of COVID-19 on global logistics, how companies have 
reacted and the opportunities that have arisen as a result.

   Moderator Evelyn Suarez began the webinar by asking the panelists how the 
pandemic has been affecting trade, which led to a discussion with Phil Levy, 
chief economist, Flexport, on recent decreases in the rate of airfreight 
transportation on commercial flights as well as ocean shipping. Curtis 
Robinhold, executive director, Port of Portland, noted that marine port tonnage 
has also declined and noted a fast dip in automobile imports. Ralph Carter, 
staff vice president, regulatory affairs, FedEx Corporation, outlined the 
changes made within FedEx to ensure the health and safety of the company's 
frontline workers by increasing virtual operations while also managing varying 
regulations employed by countries all over the world.

   Here is a link to the entire webinar: 
https://www.wita.org/event-videos/wita-webinar-supply-chains/

   AG CONTAINER EXPORTS SHOWING SOME RECOVERY

   Bruce Abbe, strategic adviser for trade and transportation, Specialty Soya 
and Grains Alliance (SSGA), summarized the effects of the COVID-19 pandemic on 
container shipping in a May 26 article on the SSGA website. The first months of 
2020 saw many trade disruptions, starting with normal import and export 
cutbacks during January's Chinese New Year period. "That was followed by the 
roller-coaster ride of trade during the COVID-19 global virus crisis," said 
Abbe.

   Major reductions in container shipping followed in February due to 
quarantines of port operations and halted manufacturing in China. A surge in 
imports of critical goods into the U.S. that were under backlog in late 
February and early March once manufacturing restarted came next.

   "But that was followed by a rash of canceled blank sailings in March and 
April as severe cutbacks in import demand emerged as the economic impact on 
global business operations due to the virus came to fruition," said Abbe. 
According to the Universal Cargo website, blank sailing is a term that means no 
sailing, or perhaps more precisely, canceled sailing. (A blank sailing refers 
to a sailing skipping one specific port while still traversing the rest of the 
scheduled route or the entire sailing being canceled.)

   "Short notice cancellations of sailings have proven to be an especially 
difficult problem for many inland exporters, like SSGA members whose containers 
travel 10 to 14 days by rail just to get to the ports and longer times on the 
water to get to customers," added Abbe.

   "Although carriers cancel sailings because of declining U.S. imports, which 
constitute the headhaul lane in the Trans-Pacific, when imports of containers 
moving to inland population centers decline, there are fewer containers 
available at urban hubs to be unloaded and refilled with export commodities," 
noted Abbe. "That creates equipment shortages for agricultural shippers in the 
interior of the country." (Headhaul defines the highest revenue-generating 
shipping lane from shipper to consignee.)

   I spoke with Abbe at the Northern Commodity Transportation Conference in 
Bloomington, Minnesota, on March 11, and at that time, he said there was a slow 
path to recovery. In a March 24 article on the SSGA website, Abbe noted that 
China's manufacturers were back at work and the rash of blank sailings of 
container vessel shipments was reportedly ending.

   However, the article noted that "in a much more unfortunate development on 
the container supply front," some SSGA member exporters reported that because 
many U.S. ethanol plants shut down or slowed operations, distillers dried grain 
with solubles (DDGS) exports, a major user of containers, were negatively 
affected due to the loss of production.

   In the DTN weekly distillers dried grains (DDG) price update, DDG offers 
were hard to come by in March and the few offers available were high. As 
production at ethanol plants has begun to slowly increase, more offers 
surfaced, and not only have prices returned to pre-COVID-19 levels, they are 
now lower. Demand for DDG in feed rations was down as some feeders moved away 
from DDG inclusion when prices spiked. While the supply chain is not yet close 
to being back to normal, feeders are beginning to include DDG in their rations 
once again, especially due to the lower prices right now.

   In their weekly DDGS export price update, U.S. Grains Council noted that 
DDGS prices were slightly higher for the week ended May 28 as international 
demand is picking up. "Barge CIF NOLA offers are steady to $5 higher while FOB 
NOLA offers are up $2 to $3 per metric ton (mt). U.S. rail rates have ticked 
slightly higher as well. However, prices for 40-foot containers to Southeast 
Asia were down for the week, averaging $232/mt."

   The outlook for container exports isn't all gloomy. "The trade is optimistic 
about export prospects for identity-preserved (IP) food grade soybean suppliers 
because in a recession, Asian consumers may choose to revert back to 
traditional nutritional soy foods, long a staple in their diets, and forego 
more expensive meats," noted SSGA board member Rob Prather of Global Processing.

   Mary Kennedy can be reached at mary.kennedy@dtn.com

   Follow her on Twitter @MaryCKenn




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