Proposed fees for U.S. ports with Chinese ships docking at them raises concerns for the U.S. red meat industry.
The U.S. Trade Representative (USTR) office held hearings the week of March 26 on a proposal to impose a service fee for each U.S. port call of a Chinese-operated ship, or a per-net-ton service fee applied on the ship’s carrying capacity.
The U.S. Meat Export Federation (USMEF) submitted comments supporting the overall intent of strengthening the U.S. shipbuilding industry, but shared concerns of the affects on exporters.
“We totally agree with the intent of this proposal from USTR to support and incentivize US ship building,” says USMEF President and CEO Dan Halstrom. “The reality is that it’s just not feasible today. It’s going to take time. So in the meantime, we don’t want to have our exporters penalized as we wait for this to happen.
The proposed fees could also price variety meats out of the marketplace.
“You look at pork and beef variety meats, for example, that might be worth $2 a pound, $1 a pound, or even less than $1 a pound,” Halstrom says. “If you’re looking at a significant per-pound freight rate increase of any kind, that would be a real challenge for some of the lower value items, maybe even at the point where it wouldn’t make sense to save them and export them. It’s about $40 per head for every fed animal slaughtered on the cattle side and on the hog side, it’s a little over $10 a head for every hog slaughtered.”
In addition, fees could dramatically reduce port calls in key locations such as the Port of Oakland, which is the largest outlet for waterborne red meat exports. It is a key gateway for chilled meat shipments to Asian markets, according to USMEF.
“Oakland represents about 40% of our waterborne exports on the beef side, and we’ve had some of these companies publicly say that Oakland would be a candidate to stop service to if this current policy of the one-time port charge of up to a million dollars were to be instated,” Halstrom says.
He adds it would not be feasible to operate all U.S. beef and pork chilled business through the southern ports of California.
“Not only from a congestion standpoint, but the other reason that Oakland is ideal is that with the short shelf life of the chilled cargo, that is the fastest point of call to get over to ports like Tokyo,” Halstrom explains.
Under the port fee proposal, options for those exporters would be very limited while that rebuilding takes place. USMEF joined more than 300 agricultural and business associations in submitting a letter to USTR outlining those concerns.
Your next read: Yield Grading Outdated: Time to Modernize
