The Worrying State of the Supply Chain

Over the past few years, supply chain issues have plagued much of the world as COVID-19 shutdowns and subsequent restarts have put extraordinary stress on the entire system. Indeed, back in April, many ag retailers started warning their grower-customers about the potential short supplies of their favorite early season products.

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In acknowledge of this ongoing issue, the Mid America CropLife Association featured a panel of three speakers from across the agricultural landscape at its virtual annual meeting in mid-September discussing the state of the supply chain. As one of them put it bluntly: “The COVID-19 pandemic turned our businesses upside down, and we are still trying to figure out how to deal with all of this. How can the industry address these, and when will things get back to what we knew in the past?”

Speaking first was Spencer Vance, North American President for Albaugh, LLC. Vance discussed at length the situation currently facing all suppliers and manufacturers when it comes to ocean freight. “Right now, there are massive shortages,” he said. “When COVID first hit, everything shut down, and it’s taking a long time to get shipping containers, ships, and port operations back up and running again. Naturally, this has caused a massive increase in the costs to get a shipping container anywhere in the world.”

Furthermore, just off the coast of the Long Beach port, there are numerous ships currently waiting to dock and be unloaded as short-handed crews try to keep pace. “Usually, there are between 20 and 40 ships waiting to unload at any time, which is normal,” said Vance. “Right now, in mid-September, there are more than 70 ships anchored off the coast, waiting to unload. And with 400 more ships getting ready to sail to the West Coast from Asian ports over the next 90 to 100 days, things likely won’t get any better for quite a while longer.”

So-called “black swan” events, tied to such things as severe storms and government mandates have further complicated the supply chain issues, he added. “In February 2021, a series of storms hit the Gulf Coast, causing serious problems with the Texas power grid,” said Vance. “Manufacturing and refining in these areas were offline for some time, which caused problems in getting such things as the petroleum, alcohols, and solvents used by agricultural producers. Then, Hurricane Ida hit just about one month ago, knocking out many more manufacturing facilities in the area, including Bayer’s main glyphosate production plant in Louisiana. We still aren’t certain when all these disruptions will be fixed.”

Dennis McCaffrey, Senior Vice President, Strategic Sales Management for XPO Logistics, agreed with Vance’s point on ocean freight causing overall supply chain issues.

“Right now, approximately 11% of global shipping capacity is tied up in the world’s oceans,” said McCaffrey. “Furthermore, manufacturing in China right now is at 50% of the level it was at during pre-COVID-19.”

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Summing up the entire supply chain issue, Andrew Howerton, Integrated Business Planning Leader for U.S. Crop Protection for Corteva Agriscience, compared it to a math problem. “Strong demand plus tightening supplies is never a good equation for our customers,” said Howerton.

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