New research estimates port congestion cost CA farmers $2.1 billion in lost exports
Between wildfires, drought, a trade war, and the COVID-19 pandemic, the last few years have been hard on California farmers. But recent research by agricultural economists from UC Davis and the University of Connecticut suggests that economic losses to California agriculture from recent supply chain disruptions may have an even greater economic impact. Their models estimate that there was a 17% decline in the value of containerized agricultural exports between May and September 2021, resulting from recent port congestion.
According to the authors of the study, including Sandro Steinbach, assistant professor in the College of Agriculture, Health and Natural Resources, this amounts to around $2.1 billion in lost foreign sales, which exceeds losses from the 2018 U.S.-China trade war.
Increased U.S. demand for imported goods from Asia also led to increased demand for empty shipping containers in Asia. Prior to the pandemic, freight rates for shipping containers from Shanghai to Los Angeles were already higher than the return trip from Los Angeles, but this gap widened significantly after COVID-19. By September 2021, the fee to ship a 40-foot container from Shanghai to Los Angeles had increased sixfold to $12,000, while the return trip from Los Angeles was only $1,400.
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