Ag supply chain likely to get even worse at harvest

An ag economist says he expects a tight supply chain situation to get worse by harvest this year.

“The outlook is maybe as bleak, if not bleaker than what we’re currently dealing with,” said the University of Missouri’s Ben Brown.

Brown says strong demand for ag products, despite elevated costs, combined with a shortage of shipping containers and labor are making a tight shipping situation worse for the ag supply chain.

He tells Brownfield normally the supply chain is less stressed this time of year as the shippers prepare for the busier harvest season.

“We’re not seeing that; we’re not seeing any relief,” he said. “As we look ahead to the next couple of months, things continue to be projected tight as we think about logistics.”

Brown said there hasn’t been an incentive to build more shipping crates for the last decade and recent high steel prices encouraged several existing containers to be scrapped, leaving the supply chain with a shortage.

“And now to try to replace that, with steel prices where they’re at, many companies just don’t see a long-term return on investment to buy new rail cars and barges,” he said.

Brown said he expects U.S. suppliers to move away from its ‘just in time’ delivery system and build more storage facilities in the near future.

Brownfield interviewed Brown during the Brownfield Weekly Commodity Market Update Tuesday.

  • As of mid April I’m seeing a slight softening in trucking availability. The primary reason is a worsening economy and the slow decline of freight to move by truck. Granted this article is about containers but it is absent of the consideration I’m bring to light. Freight availability has stepped down to some degree and I expect it to continue. Be sure this trend will find its’ way into the container business. If you remember the 2007-2008 economy and its’ effect on transportation you have a valuable window seat into what may be sooner than later.

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