Exporters' logistical log-jam

Exporters' logistical log-jam


THE export supply chains in two major exporting nations are struggling to cope with a mix of adverse weather and large export orders.


THE export supply chains in two major exporting nations are struggling to cope with a combination of adverse weather and large export orders.

Rabobank grains analyst Graydon Chong said the much-publicised woes in Canada were due to a combination of that nation’s record grain harvest and a bout of poor weather throughout the start of 2014.

He said it was having an impact on near term grain prices as marketers sought to meet obligations from other origins.

“It’s having an impact on prices, as the sheer volume of harvest is really delaying grain movement through the terminals,” Mr Chong said.

He said Canada’s tough winters often slowed up grain deliveries to port, but this year, exporters had cut time frames fine due to the demands on shipping capacity.

When the cold snap hit, delays quickly mounted.

Mr Chong said Canada’s storage system also contributed to the problem.

“A lot of grain in Canada is stored on farm and then loaded directly onto trains, there isn’t as much bulk storage on the railheads, so that system relies even more on timely movements of grain and when that doesn’t happen it can get congested.”

Mr Chong’s colleague, Brazilian agriculture analyst Andy Duff said supply chain issues in Brazil were due more to input pricing than weather.

“Diesel prices in Brazil have risen three times since the beginning of 2013, with the most recent hike of 8 percent at the end of November 2013," Mr Duff said.

“Given the long distances between major crop production regions and the country´s ports, sustained major investments in infrastructure over the coming years remain pivotal if the country is to continue to expand production and export volumes while remaining competitive.”

Mr Duff said it was likely there would be further port bottlenecks in Brazil again this year.

“Although Brazil is slowly addressing its bottlenecks, this will take years.

“For 2014, with higher fuel costs and another large grain harvest, logistics costs for Brazilian agribusiness are unlikely to decline”.

The story Exporters' logistical log-jam first appeared on Farm Online.


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