The global supply chain crisis has abated, but problems remain, requiring continuous improvement and ongoing vigilance.  

Supply chain transparency is one of the many goals USDEC and the National Milk Producers Federation are working on. Photo credit: Canva

At the height of a global supply chain crisis that slowed the flow of cheese and other U.S. dairy exports to a crawl two years ago, U.S. Dairy Export Council (USDEC) President and CEO Krysta Harden told a Washington, D.C., gathering of industry leaders and policymakers that “We’re living with this new normal that’s entirely abnormal.”

President and CEO Mike Durkin of Leprino Foods, the world’s largest producer of Mozzarella cheese, warned at a U.S. House Agriculture Committee hearing that the U.S. dairy industry could see “irreparable harm” if it lost its reputation as a reliable global supplier due to supply chain issues.

If you export, your supply chain is crucial to your success because it is how you get your products from here to there.

During the crisis, exporters struggled to secure shipping container space on ocean vessels while paying exorbitant detention and demurrage fees at West Coast ports, where the logjams were the worst, preventing U.S. suppliers from shipping to Asia.

Fortunately, something approaching supply chain normalcy has returned.

But this is no time for complacency. Without constant vigilance, another supply chain crisis could paralyze U.S. cheese exports in the future.

I work to help prevent that from happening as the trade policy director at USDEC and the National Milk Producers Federation (NMPF). Working with USDEC member companies and others, we push to improve supply chains for the entire U.S. dairy industry continuously.

Our focus is on three goals to help U.S. cheese and other dairy exports flow across our borders:

1. Bring more predictability to exporters by properly implementing the Ocean Shipping Reform Act.

In June 2022, President Biden signed the Ocean Shipping Reform Act (OSRA) into law — key legislation to address a supply chain crisis plaguing dairy exporters with unprecedented delays and record fees over two volatile years. USDEC and NMPF provided a hand in shaping the legislation and championing the bill into law.

While OSRA delivered a few immediate victories for dairy exporters, including directing the Federal Maritime Commission (FMC) to establish limits on detention and demurrage fees that were incurred outside of a shippers’ control, the bill also set up an implementation process to address more entrenched issues.

USDEC and NMPF have guided four detailed sets of comments over the past year-and-a-half to the FMC as it crafts new rules related to detention and demurrage fees, what constitutes an ocean carrier’s unreasonable refusal to deal or negotiate and the establishment of a supply chain emergency. Most notably, the FMC issued a July 28 supplemental rulemaking on how the agency can best hold ocean carriers responsible for unreasonably refusing to carry exports after citing USDEC and NMPF’s comments over 20 times in the revised rule. FMC’s definition of “unreasonable” has far-reaching implications, and the organizations were insistent that the commission’s ultimate determination prohibits ocean carriers from discriminating against perishable dairy exports that cannot be left waiting on a dock for days or weeks.

As the OSRA rulemaking process continues, USDEC and NMPF remain heavily engaged with the FMC and Congress to ensure that the new rules bring some certainty to what has been an unpredictable supply chain.

2. Increase supply chain transparency for exporters through the new FLOW program.

USDEC has been a vocal advocate for increased export supply chain transparency, particularly as frequently opaque information related to shipping schedules and equipment location continues to put U.S. dairy exporters at a disadvantage. USDEC coordinated a Sept. 8 U.S. Department of Transportation (DOT) briefing on its new Freight Logistics Optimization Works (FLOW) program with several companies engaged in the organization’s supply chain working group.

FLOW, which was launched in March 2022, allows supply chain stakeholders within the United States — ocean carriers, ports, motor carriers, railroads, warehouses and others — to exchange data, which results in macroeconomic indicators of goods moving throughout the supply chain. The administration’s new FLOW initiative incorporates elements of the now-defunct USDA Ocean Shipping Container Availability report, which USDEC has long called for resuming. Dairy exporters interested in the FLOW initiative can find additional information at www.bts.gov/flow.

USDEC and NMPF also submitted comments on Oct. 13 to the FMC that outline the reliability of various data and information on the entities that provide shipping information. The organizations continue to explore options to increase visibility into container and equipment locations to eliminate unnecessary delays and added costs.

3. Work with Congress and the administration to mitigate risks to dairy supply chains.

Following 13 months of negotiations and work disruptions that seriously threatened the export supply chain, West Coast dockworkers and port terminals announced a tentative agreement on June 14. USDEC and NMPF had led engagement with the administration and Congress throughout the labor talks, requesting that the federal government do everything in its power to ensure that the negotiations do not dissolve into a full work stoppage, which would have devastating effects for dairy exporters.

USDEC engages with other supply chain issues as they arise, including ongoing trucking disruptions at the southern border and issues related to container break-ins.

Getting cheese and other exports moving swiftly through global supply chains is not a one-and-done deal. Ongoing success requires vigilance, tracking what is happening to shipments and building relationships with people who can help when needed.

From our headquarters in Arlington, Virginia, we can see the Washington Monument. This proximity to the federal government gives us face-to-face time with policymakers on behalf of USDEC members who solely fund our advocacy through the dues they pay.

At USDEC, we passionately believe that the U.S. is positioned like no other country to supply sustainable cheese and dairy ingredients to the world consistently. To make that vision a reality, we must continue to work tirelessly with our members and dairy partners for a free-flowing global supply chain.

Tony Rice is trade policy director at the U.S. Dairy Export Council and the National Milk Producers Federation. This article appeared first in Cheese Market News, Copyright 2023 Quarne Publishing LLC.

Subscribe to the U.S. Dairy Exporter Blog  
  

The U.S. Dairy Export Council fosters collaborative industry partnerships with processors, trading companies and others to enhance global demand for U.S. dairy products and ingredients. USDEC is primarily supported by Dairy Management Inc. through the dairy farmer checkoff.