A new study by economists from the University of Georgia and North Dakota State University (UGA-NDSU) has found that a recent increase in shipping costs could boost US exports, World Grain reported.
While a spike in maritime transportation rates had not affected export levels and prices received by producers in the short-term, it was likely they would have an impact in the long-term, according to the 3 March report.
At the same time, export share models predicted that rates consistent with those seen in 2021 would lead to the USA increasing its share of the global corn and soyabean export market, World Grain wrote.
As part of the study, the UGA-NDSU research team studied maritime transport data from publicly traded companies, difficult-to-source proprietary data, and US Department of Agriculture (USDA) figures, the report said.
While rising rates had affected exporters of corn, soyabeans, tree nuts and a range of other commodities, the UGA-NDSU team found that recent spikes in those shipping rates – after factoring in inflation – did not necessarily differ from the historic norm.
The study’s aim was to discover the determinants and how ocean freight rates were set; how those shipping rates affected US maritime export levels of agricultural commodities in terms of weight; prices received by producers and global export market share; and how the performance of publicly traded firms was directly affected by shipping backups that influence maritime transportation rates.
“Our main findings are that ocean transportation freight rates rise with the things that economists might expect would cause those rates to rise such as the demand for shipping, fuel prices, congestion at destination ports, and they tend to fall with increases in the fleet capacity, the ability of the fleet or the size of the fleet measured in deadweight tonnage,” UGA associate professor Michael Adjemian said.
“Although we can’t identify statistically significant effects of those higher rates on US maritime outcomes — ag export levels, or the prices that are received by producers in the short run, the most likely models that we estimate, the median effects, are in the direction that you might expect.”
The study also looked at the effect of rising maritime transportation prices on the global market share for corn and soyabeans. The Monte Carlo simulation model indicated the USA gaining about a 4% market share in soyabeans and Brazil’s share dropping by the same percentage.
For corn, the USA and Brazil both gained at the expense of Argentina and Ukraine.
“This makes sense because even though the USA is closer to China - a major demand centre for soyabeans - than Brazil is, these ocean freight rises and congestion challenges are going to act eventually to shorten supply chains,” Adjemian added.
Adjemian called for improved maritime data transparency to better inform policy makers and supply chain decision makers.
“Infrastructure investments and policies that permit more throughput at the port level can ease supply chain pressure and a really good example of that is the recently announced partnership between the USDA and the port of Oakland that has popped up in California to help agricultural firms secure and fill empty containers for export,” he said.