Recent Trade Imbalance Strains American Exports : Planet Money : The Indicator from Planet Money The transportation industry has a bottleneck right now, not only with imports, but also exports. Still many container ships are leaving American shores empty. Why is that?

Too Much Import, Too Little Export

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SYLVIE DOUGLIS, BYLINE: NPR.

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SALLY HERSHIPS, HOST:

This is THE INDICATOR FROM PLANET MONEY. I'm Sally Herships, in for Stacey Vanek Smith. And I am here today with NPR economics correspondent Scott Horsley.

SCOTT HORSLEY, BYLINE: It's great to be with you, Sally.

HERSHIPS: Great to be with you. We have talked a lot during the pandemic about the bottlenecks in the country's transportation network. For much of last year, Americans couldn't spend money eating out, traveling, so we splurged on all this stuff. We spent way more than we used to. Personally, I spent a lot on takeout food. And people were buying so many laptops and big-screen TVs and Peloton bikes that all of those goods have started overloading our ability to deliver them.

HORSLEY: That's right. And a lot of that stuff is coming from Asia. So we've got cargo ships stacked up on the West Coast. We've got freight railroad yards that are jammed with traffic. We've got tractor trailers that are taking longer than usual to make their deliveries.

HERSHIPS: OK, so those are the headaches that come with bringing goods into the country from places like China. But it turns out that there are just as many challenges and maybe even more for Americans who are trying to ship their stuff out.

HORSLEY: Yeah, American exporters say they're having a lot of challenges getting their goods to customers in Asia. Even though the cargo ships have just dropped off boatloads of imports here in the United States, they're sailing back across the Pacific with a lot of empty containers. And that's frustrating for people like Bob Sinner. He's a soybean exporter from North Dakota.

BOB SINNER: Everybody on the export side is screaming.

HERSHIPS: Screaming because more than 3 out of 4 cargo containers leaving Los Angeles these days are empty at the same time as products we are supposed to be exporting, like Bob Sinner's soybeans, are piling up in American warehouses. And that's one reason the nation's trade deficit widened in June to an all-time high of nearly $76 billion. We will explore what's behind this curious one-way shipping traffic with a lot of stuff coming in and not so much coming out right after the break.

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HORSLEY: Bob Sinner's family has been farming in the Red River Valley of North Dakota for more than a century. And right now Sinner runs a company that sells specialized soybeans to food manufacturers. About 80% of his business is to customers outside the United States.

SINNER: Primarily in Asia - tofu, soy milk, natto, miso, soy sprouts.

HERSHIPS: Ordinarily, most of Sinner's soybeans are loaded onto container ships that carry them all the way across the Pacific Ocean from North Dakota. But first, they have to get from North Dakota to the West Coast, and that is about a 1,400-mile trip that is usually made with some kind of combination of trucks and trains.

SINNER: Because we're in the inner parts of the United States, we have rail terminals that basically handle the containers that come into and out of this country.

HORSLEY: Ordinarily, it's the same containers that bring imports into the U.S. and then ferry American exports back to Asia. But lately, because there is so much stuff pouring into the country, that efficient round-trip delivery network is breaking down. You've got trucks that are delayed. You've got rail yards that are overflowing with cargo. And because of that traffic jam, you've got warehouses bursting with soybeans that Sinner is not able to deliver to his Asian customers.

SINNER: We talk to our transportation supply chain, saying, why are you ignoring exports? - because this is critical business for us.

HERSHIPS: Hold on a second because in reality, Sinner knows why. He says shipping companies have always been able to charge more to transport the stuff they are bringing into the United States than the stuff they're carrying out. And that's because these imports, things like iPhones, are typically way more valuable than the stuff we export, like his soybeans. But right now that gap between import and export shipping prices has widened into what you might call a shipping Grand Canyon.

HORSLEY: Yeah, right now there's so much demand from U.S. consumers, shipping companies are able to charge more than seven times as much for a container they're bringing into the United States as one that's going back across the Pacific to Asia.

HERSHIPS: So this really weird thing is happening. American exporters are paying way, way less, but at the same time, they are still not happy.

HORSLEY: Yeah, yeah. According to S&P Global Platts, it cost about $1,000 last month to ship a container from the West Coast of the United States to Asia. But to bring that same container into the U.S., a shipping company can charge more than $7,000 dollars. So for a shipping company, it can actually be more profitable right now to race back to Asia with an empty container than to wait around for it to be loaded up with American exports. And that's bad news for people like Sinner.

SINNER: Do the math. I mean, yes, it takes a little more time to get that container loaded. Then it gets back overseas. It takes a little more time to get that product unloaded before that empty container can get back in the system and loaded with that high-value import to the United States. It's all about getting those empty containers back overseas to capture that extra revenue for imports coming into this country. That's what's so frustrating.

HORSLEY: Think of this like an airline that is catering to high-paying, first-class customers rather than waiting around to deal with a bunch of discount tourists who take a long time to get on and off the airplane.

HERSHIPS: I feel like if I was a soybean, I would take this personally. This is kind of insulting.

HORSLEY: (Laughter).

HERSHIPS: Sinner says he has even offered to pay slightly higher shipping rates, but service has not improved, which feels typical. Meanwhile, deliveries to his Asian customers are at least a month and a half behind schedule, which is a long time.

SINNER: We've had customers in Asia that have had to stop their operations waiting for supply. It also means that our farmers need to get their storage facilities empty because we have a new crop that's coming in September, October. We have to get this product moving.

HERSHIPS: Both exporters and shipping experts say part of the problem is a geographic mismatch. Import containers are typically unloaded in cities, like Chicago or Minneapolis, where a lot of consumers live. But when you refill those containers with exports, first, you have to get the containers where the stuff is, which is in smaller communities, like in Casselton, N.D., which is where Sinner and his soybeans are based.

SINNER: A huge part of our exports are coming out of rural America. We have to figure out a better system to getting the containers for export to where it's needed.

HORSLEY: Now, eventually, these traffic jams that have been messing up that triangular trade ought to get worked out. At some point, Americans will shift their spending more into services like eating out and travel. And presumably, they'll spend a little bit less on stuff, so that flood of imports should recede, but that could take a while.

HERSHIPS: I don't know that America can dial back its consumption.

HORSLEY: (Laughter).

HERSHIPS: Right now import traffic is choked with back-to-school supplies. And pretty soon stores are going to be stocking up for Christmas.

HORSLEY: Yeah. Sinner thought he might get a break from shipping headaches last year when Christmas was over. But the relief he was hoping for never really arrived.

SINNER: We got to January, and they said, eh, I think this is going to last into the late spring. We got into April - well, it looks like it's going to last into, you know, midsummer. Now they're saying it could be better by the end of the year. Who the hell knows?

HERSHIPS: Sinner is worried that if he can't find the containers, the trucks, the railcars and ships to take his soybeans across the Pacific on a reliable timetable, Asia's tofu and miso makers might just take their business elsewhere to other countries like Australia or Brazil.

SINNER: Let's be honest. We're not the only store in town. Our customers have choices. And if we can't deliver at an efficient and reliable way, they're going to look for other sources for their product.

HORSLEY: And if that happens, if those customers do go elsewhere, they may not quickly come back. And that would turn this temporary transportation mess into a lasting problem for America's exporters.

HERSHIPS: Ouch, Scott. That does not sound good for Bob Sinner's soybeans or for our trade deficit. Maybe I should stop shopping right now.

This episode of THE INDICATOR was produced by Jamila Huxtable with engineering help from Gilly Moon. It was fact-checked by Michael He. THE INDICATOR is edited by Kate Concannon and is a production of NPR.

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