Supply Chain

United States Eases Port Fees On China-Built Ships After Industry Backlash

Fri, 18 Apr 2025 16:04:09 GMT

The Trump administration shielded on Thursday domestic exporters and vessel owners servicing the Great Lakes, the Caribbean and U.S. territories from port fees to be levied on China-built vessels, aiming to revive U.S. shipbuilding .

The Federal Register notice posted by the U.S. Trade Representative was watered down from a February proposal for fees on China-built ship s of up to $1.5 million per port call that sent a chill through the global shipping industry.

Ocean shipping transports about 80% of global trade — from food and furniture to cement and coal. Industry executives feared virtually every cargo carrier could face steep, stacking fees that would make U.S. export prices unattractive and foist annual import costs of $30 billion on American consumers.

“Ships and shipping are vital to American economic security and the free flow of commerce,” U.S. Trade Representative Jamieson Greer said in a statement. “The Trump administration’s actions will begin to reverse Chinese dominance, address threats to the U.S. supply chain, and send a demand signal for U.S.-built ships.”

Still, the fees on Chinese-built ships add another irritant to swiftly rising trade tensions between the world’s two largest economies as President Donald Trump seeks to draw China into talks on his new tariffs of 145% on many of its goods.

The revisions tackle major concerns voiced in a tsunami of opposition from the global maritime industry, including domestic port and vessel operators as well as U.S. shippers of everything from coal and corn to bananas and cement.

They grant some requested carve-outs, while phasing in fees that reflect the fact U.S. shipbuilders, which turn out about five vessels annually, will need years to compete with China’s output of more than 1,700 a year.

The USTR exempted ships that ferry goods between domestic ports as well as from those ports to Caribbean islands and U.S. territories. Both American and Canadian vessels that call at Great Lakes ports have also won a reprieve.

As a result, companies such as U.S.-based carriers Matson and Seaboard Marine would dodge the fees. Also exempt are empty ships arriving at U.S. ports to load up with exports such as wheat and soybeans.

Foreign roll-on/roll-off auto carriers, known as ro-ros, are eligible for refunds of fees if they order or take delivery of a U.S.-built vessel of equivalent capacity in the next three years.

The USTR set a long timeline for liquefied natural gas (LNG) carriers. They are required to move 1% of U.S. LNG exports on U.S.-built, operated and flagged vessels within four years. That percentage would rise to 4% by 2035 and to 15% by 2047.

The agency, which will implement the levies in 180 days, also declined to impose fees based on the percentage of Chinese-built ships in a fleet or on prospective orders of Chinese ships, as originally proposed.

The fees will be applied once each voyage on affected ships a maximum of six times a year.

Executives of global container ship operators, such as MSC and Maersk MAERSKb.CO, which visit multiple ports during each sailing to the United States, had warned the fees would quickly pile up.

Instead of a flat individual fee on large vessels, the USTR instead opted to levy fees based on net tonnage or each container unloaded, as was called for by operators of small ships and transporters of heavy commodities such as iron ore.

From October 14, Chinese-built and owned ships will be charged $50 a net ton, a rate that will increase by $30 a year over the next three years.

That will apply if the fee is higher than an alternative calculation method that charges $120 for each container discharged, rising to $250 after three years.

Chinese-built ships owned by non-Chinese firms will be charged $18 a net ton, with annual fee increases of $5 over the same period.

It was not immediately clear how high the maximum fees would run for large container vessels, but the new rules give non-Chinese shipping companies a clear edge over operators such as China’s COSCO 600428.SS.

The notice comes on the one-year anniversary of the launch of the USTR’s investigation into China’s maritime activities.

In January, the agency concluded that China uses unfair policies and practices to dominate global shipping.

The actions by both the Biden and Trump administrations reflect rare bipartisan consensus on the need to revive U.S. shipbuilding and strengthen naval readiness.

Leaders of the United Steelworkers and the International Association of Machinists and Aerospace Workers, two of five unions that called for the investigation that led to Thursday’s announcement, applauded the plan and said they were ready to work with the USTR and Congress to reinvigorate domestic shipbuilding and create high-quality jobs.

The American Apparel & Footwear Association reiterated its opposition, saying port fees and proposed tariffs equipment will reduce trade and lead to higher prices for shoppers.

At a May 19 hearing, the USTR will discuss proposed tariffs on ship-to-shore cranes, chassis that carry containers and chassis parts. China dominates the manufacture of port cranes, which the USTR plans to hit with a tariff of 100%.

The Federal Register did not say if the funds raised by the fees and proposed crane and container tariffs would be dedicated to fund a revival of U.S. shipbuilding.

(Reporting by Lisa Baertlein in Los Angeles, David Lawder and Andrea Shalal in Washington and Jonathan Saul in London; Editing by Jamie Freed, Clarence Fernandez and Gerry Doyle)

USDA Prepares to Protect Farmers in a Trade War

Wed, 05 Mar 2025 19:24:04 GMT

As the clock struck midnight on March 4, President Donald Trump’s new tariffs on imports from Canada, Mexico and China went into effect. Almost immediately, global markets started to react, and trading partners retaliated.

While the full economic consequences of the trade war remain to be seen, Secretary of Agriculture Brooke Rollins has promised to have a plan, such as the Market Facilitation Program (MFP), ready for farmers, if needed. In 2019, MFP provided direct payments to producers impacted by retaliatory tariffs, resulting in the loss of traditional exports.

“Everything is on the table right now. Everything. I know that President Trump, whom I speak with regularly, realizes the state of the farm economy in this country,” Rollins said on Sunday at Commodity Classic . “The last time, I know, he pushed Secretary Perdue to ensure we were able to make whole–as best as we could–some of those, and hopefully most of those, if not all, who had been hurt. We’re building the team at USDA to ensure we have the structure and the plan in place to allow us to move very quickly.”

In an interview with Farm Journal at Commodity Classic, USDA Economist Seth Meyer says he has been instructed by Secretary Rollins to be ready for a relief program, and he’s started calculating what possible relief could look like.

“Calculating something right today would not be helpful because we don’t know where we’re going to be, but absolutely, the Secretary instructs: ‘You need to be ready, have your pencil sharpened and have your tools available. Think about how you would proceed,’” Meyer says. “We are ready in that backstop. It won’t be easy. We’ve talked a lot about different countries. We’ve talked about reciprocal trade, but we are indeed sharpening our pencils to be able to do what she’s asked us to do.”

Here are the key details of the U.S. tariffs and retaliation from Canada, Mexico and China.

(Farm Journal)

Canada responded swiftly with plans to impose 25% tariffs on nearly $100 billion of U.S. imports over two tranches. Mexican President Claudia Sheinbaum plans to announce retaliatory tariff and non-tariff measures against the U.S. at an upcoming rally in Mexico City’s central square.

Meyer’s question is, “Can Mexico afford to retaliate?”

(Farm Journal)

As President Trump’s tariffs drew swift retaliation from trading partners, the ag industry was quick to react.

Impact on Farm Machinery
Equipment makers are concerned about the additional duties, especially after a rough year for the industry.

“We have spent decades laying down supply chains across the world. Our industry is global — 30% of all equipment made in the U.S. is destined for export. Canada is our largest market outside of the U.S.,” says Johan “Kip” Eideberg, senior vice president – government and industry relations, Association of Equipment Manufacturers (AEM). “If we want to create more jobs here in America, we need to sell more equipment and that means selling to customers outside of the U.S.”

As detailed in From the Factory to Your Fields: Where Farm Equipment Is Made , the ag equipment manufacturing industry is fully integrated across the three North American allies involved in the so-called “trade wars.”

“Anytime you disrupt those tightly connected supply chains — and tariffs would be a direct disruption — it’s going to have a serious impact on equipment manufacturers and on our farmers,” Eineberg says. “Given that Canada is our largest export market, we’re sending almost $10 billion worth of goods to Canada every year, there’s a lot at stake here.”

In 2018, Eineberg estimates, tariffs on steel, aluminum and farm inputs from China drove up the cost of making equipment in the U.S. by about 9 percentage points.

“Obviously, manufacturers will try to absorb as much of that as they can, but inevitably some of it will be passed down to the consumer, which in this case is our farmers and ranchers,” he adds.

AEM is also sounding the alarm on the compounding effect of tariffs, specifically due to the tight integration of manufacturing cycles on both sides of the border. There are often cases, Eineberg says, where components and raw materials are shuttled three to five times across the border between different factories in the manufacturing process. That means each time a piece of steel or other raw material being manufactured into a component for a tractor crosses the border, the tariffs multiply.

An example of the cross-border journey of one piece of agriculture equipment from raw material to delivery on the farm.

(AEM)

Impact on Rural America and Fertilizer
American Farm Bureau President Zippy Duvall expressed alarm about potential harm to farmers resulting from imposing stiff tariffs on the top three agricultural markets by value for the U.S.

“Farm Bureau members support the goals of security and ensuring fair trade with our North American neighbors and China, but, unfortunately, we know from experience that farmers and rural communities will bear the brunt of retaliation.” Duvall says.

Of note, more than 80% of the U.S. supply of potash , a key fertilizer product, comes from Canada.

“Tariffs that increase fertilizer prices threaten to deliver another blow to the finances of farm families already grappling with inflation and high supply costs,” Duvall adds. “The uncertainty hits just as operating loans are being secured and spring planting approaches, leaving farmers in a tough spot.”

(Farm Journal)

Read: Fertilizer Manufacturers and Retailers React to Trade Tariffs

Impact on Soybeans
During the 2018 trade war with China, U.S. agriculture experienced more than $27 billion in losses, with soybeans accounting for 71% of those losses, according to the American Soybean Association (ASA). Unlike in 2018, farmers are in a more tentative financial situation in 2025. Commodity prices are down nearly 50% from three years ago, while the costs for land and inputs, such as seed, pesticides and fertilizer, are high.

In an ASA statement, it says for years the organization’s farmer-members have consistently maintained their position that they do not support the use of tariffs, which threaten important markets and raise input costs for farmers, as a negotiation tactic.

“Farmers are frustrated. Tariffs are not something to take lightly and ‘have fun’ with. Not only do they hit our family businesses squarely in the wallet, but they rock a core tenet on which our trading relationships are built, and that is reliability. Being able to reliably supply a quality product to them consistently,” says Caleb Ragland, ASA president and soybean farmer from Magnolia, Ky.

Soybeans by far make up the largest volume of ag products exported to China. In 2024, U.S. exporters sent 27 million metric tons of soybeans to China valued at $12.76 billion, according to USDA. Mexico is the second-largest customer for whole soybeans, soybean meal and soybean oil. Canada is the fourth-largest customer for soybean meal.

“Soybean producers face huge, disproportionate impacts from trade flow disruptions, particularly to China,” Ragland says. “And we know foreign soybean producers in Brazil and other countries are expecting abundant crops this year and are primed to meet any demand stemming from a renewed U.S.-China trade war.”

Impact on Corn and Ethanol Demand
Market analysis shows tariffs won’t solve the U.S. trade deficit and instead will just shift business to other countries, says Neil Caskey, CEO, National Corn Growers Association (NCGA).

“We issued a study back in the fall that documented the implications of tariffs and specifically retaliation in a trade war — it’s not good for corn farmers, farmers in general,” he says. “We did that in conjunction with the American Soybean Association, and it concluded a trade war is really only good for Brazil, and we hope to avoid that.”

The top two destinations for corn and ethanol are Mexico and Canada. According to Krista Swanson, chief economist, NCGA, 40% of U.S. corn exports go to Mexico and more than 40% of U.S. ethanol exports are shipped to Canada.

“[Corn] is a commodity [those countries] consume way more than what they produce, so they’re going to have to get it from somewhere,” she says. “There’s definitely some concern about losing corn [exports], but how much is lost is left to be seen because it depends on what happens with shifting trade flows.”

Impact on Beef and Pork Sectors
U.S. meat export could be impacted by the tariff war as well, with China singling out pork and beef for a 10% counter tariff. Mexico, China and Canada accounted for 8.4 billion in U.S. red meat exports last year, according to the U.S. Meat Export Federation (USMEF).

USMEF is disappointed no agreements were reached to avoid or postpone the tariffs, but president and CEO Dan Halstrom says just because there are tariffs, doesn’t mean trade will stop.

“I do think the thing that we have definitely in our favor is that demand for our products globally is record breaking. I mean, it’s as good as I’ve ever seen it in 40-plus years,” he says. “I think that we have a very unique product. We got to keep that in mind because that’s a big leverage point.”

Halstrom says it could be a bumpy ride for a while, but it’s not something exporters can’t overcome.

Read: Industry Comments on Retaliatory Tariffs on U.S. Pork and Beef

China Hits U.S. Agriculture, Says It Won't Be Bullied by Fresh Trump Tariffs

Tue, 04 Mar 2025 16:28:54 GMT

China retaliated swiftly on Tuesday against fresh U.S. tariffs with hikes to import levies covering $21 billion worth of American agricultural and food products, moving the world’s top two economies a step closer towards an all-out trade war.

Beijing also slapped export and investment curbs on 25 U.S. firms, on grounds of national security, but, unlike when it retaliated against the Trump administration’s February 4 tariffs, this time avoided punishing any household names.

“Trying to exert extreme pressure on China is a miscalculation and a mistake,” a foreign ministry spokesperson told a press conference in Beijing, adding that China had never succumbed to bullying or coercion.

The latest retaliatory measures came as the extra duty of 10% U.S. President Donald Trump threatened for the world’s second-largest economy took effect at 0501 GMT on March 4.

That makes for a cumulative 20% tariff in response to what the White House considers Chinese inaction over drug flows.

China has accused the White House of “blackmail” over its tariff hike, saying it has some of the world’s toughest anti-drug policies.

Analysts say Beijing still hopes to negotiate a truce on tariffs, deliberately setting its hikes below 20% to leave its negotiators room to hash out a deal, but each escalation reduces the chance of a rapprochement.

“China’s government is signaling that they do not want to escalate,” said Even Pay, an agriculture analyst at Trivium China.

“It’s fair to say we’re in the early days of Trade War 2.0,” Pay said, adding there was still time to avoid a protracted trade war if Trump and Chinese President Xi Jinping were able to strike a deal.

Later on Tuesday, China said it would investigate U.S. producers of a type of optical fibre for circumventing anti-dumping measures, suspended the import licenses of three U.S. exporters, and halted China-bound shipments of U.S. lumber.

Additional Levies to Hit About 15% of U.S. Exports

The new U.S. tariffs represent an additional hike to pre-existing levies on thousands of Chinese goods.

Some of these products took the brunt of sharply higher U.S. tariffs last year under then President Joe Biden, including a doubling of duties on semiconductors to 50% and a quadrupling of tariffs on electric vehicles to more than 100%.

The 20% tariff will hit several major U.S. consumer electronics imports from China that had previously escaped untouched, from smartphones and laptops to video game consoles, smartwatches, speakers and Bluetooth devices.

China responded immediately after the deadline, with an additional tariff of 15% tariff on U.S. chicken, wheat, corn and cotton and an extra levy of 10% on U.S. soybeans, sorghum, pork, beef, aquatic products, fruits and vegetables and dairy imports from March 10.

The additional levies will hit about 15% of U.S. exports to China or $21 billion worth of trade, according to Reuters calculations based on U.S. census data for 2024.

Beijing also added 15 U.S. companies to its export control list that bars Chinese firms from supplying American companies with dual-use technologies.

It also put 10 U.S. companies on its Unreliable Entity List for selling arms to Taiwan, which China claims as its own territory, although the self-governing island rejects that.

“We’re still on track to 60% (tariffs),” said Cameron Johnson, a supply chain expert at Tidalwave Solutions, referring to Trump’s campaign trail threat.

“At the moment, with 20%, it just barely moves the needle for companies wanting to move potential supply chains out of the country,” he added.

“At 35%, we start to see that companies will start to move or consider other strategies.” China is the biggest market for U.S. agricultural products, and the sector has long been vulnerable to being used as a punching bag at times of trade tension.

Chinese imports of U.S agriculture goods fell for a second year to $29.25 billion in 2024, from $42.8 billion in 2022.

China’s futures markets were steady on the news.

The most actively traded soymeal and rapeseed meal futures in the world’s biggest agricultural importer rose 2.5% on Monday after the Global Times said Beijing planned to target U.S. agricultural exports.

Supply Chain Shifts

Trade tension risks exacerbating U.S. inflation and China’s efforts to ensure a durable post-COVID economic recovery, which has been heavily reliant on exports.

On Tuesday, the U.S.-China Business Council (USCBC) applauded Trump’s goal of tackling illegal trade in fentanyl, but said raising tariffs on Chinese products was not the way to achieve that goal.

“Across-the-board tariffs will hurt U.S. businesses, consumers, and farmers and undermine our global competitiveness,” its president, Sean Stein, said in a statement. All the same, the China-U.S. trade war could benefit third countries.

Since the United States and China imposed tit-for-tat tariffs during Trump’s first term, Beijing has moved to cut its reliance on American farm goods by spurring domestic production and buying more from countries such as Brazil.

U.S. agricultural exporters could also step up efforts to replace the China market by shipping more to Southeast Asia, Africa and India.

“Chinese tariffs on U.S. wheat and corn imports should be supportive for demand for Australian wheat and barely exports,” said Dennis Voznesenki, an analyst at Commonwealth Bank in Sydney.

“However, China’s recent slowdown in imports of feed grains from all origins should temper the excitement.”

(Reporting by Joe Cash, Mei Mei Chu and Nicoco Chan; Additional reporting by Ethan Wang, Qiaoyi Li, Ellen Zhang, Lewis Jackson and Ella Cao; Editing by Christian Schmollinger and Clarence Fernandez)

How Important is U.S. Ag and Food to the Economy?

Fri, 27 Sep 2024 01:31:09 GMT

As the saying goes, “numbers don’t lie,” and this rings especially true in the 2023 Feeding the Economy report, showing the economic importance of U.S. food and agriculture to communities throughout the nation.

Sponsored by 25 food and agriculture groups across all areas of the food supply chain, the report illustrates the food and agricultural impact on local and nationwide economic activity, underscoring the sector’s resilience and reliability amid a number of global and domestic disruptions.

“Feeding the Economy demonstrates how agriculture is connected to each stage of the supply chain, every item in the grocery store and relied upon by multiple other indispensable industries. The report provides insightful data and research on how the food and agriculture industry consistently generates a positive trade balance as well as millions of jobs while boosting economic vitality in rural and urban areas,” says Mike Seyfert, president and CEO of the National Grain and Feed Association.

Economic Output

Showing an increased economic output in all 50 states compared to the 2022 report, the industries contributed to over $8.6 trillion, nearly 20%, of the country’s economic activity. In addition, the industries accounted for over $202 trillion in export value.

Reflecting a rebound in national economic activity, the largest total output gains were from Hawaii (31%), North Dakota (26%), New York (23%), Nevada (22%) and Florida (21%), according to the report.

Agriculture and food businesses also contribute over $947 trillion to federal and state taxes, including $565.3 trillion and $382.5 trillion, respectively.

Jobs and Wages

Despite the economic challenges and disruptions associated with the COVID-19 pandemic, in 2023, a total of 22,924,189 million jobs are tied directly to the food and agriculture sector, claiming $927.4 billion in wages. This contributes to a total of over 46.2 million jobs and $2.6 trillion in wages supported across the whole supply chain, increasing nearly 2% since 2019.

Productivity

“The strength and growth highlighted in this year’s report reinforce that agriculture is evolving and innovating to meet the demands of the 21st century,” the report says.

USDA notes that between 1948 and 2019, land use for agriculture decreased by 28% while land productivity grew nearly four times and labor productivity grew more than 10 times, the report adds, with agriculture’s total factor productivity growth rate among the highest of U.S. sectors.

While producers raise crops, produce and livestock on two of every five acres of U.S. soil, millions of other U.S. workers fulfill jobs in over 200,000 food manufacturing, processing and storage facilities to strengthen the food supply chain across the world. Additionally, approximately 200,000 retail food stores and over 1 million restaurant locations provide food for communities from coast to coast.

The sheer number of jobs and total of wages, taxes and export values highlight the vitality of the industry to our nation. However, for many Americans, both rural and urban, agriculture and food are more than simply a paycheck.

“American agriculture is really the foundation of our lives and our economy. This study reveals the numbers, and maybe some of the spirit, of this one indispensable sector,” says Roger Cryan, chief economist at the American Farm Bureau Federation.

The full report can be found on the Feeding the Economy website .

John Phipps: Is There Really a Shortage of Truck Drivers?

Mon, 14 Aug 2023 16:07:06 GMT

Cast your mind back to early 2022 and the headline-grabbing Trucker Shortage . My conclusion then was there wasn’t much hard data to substantiate that alarm. There has always been a need for truckers and perversely there seems to have always been ample qualified workers to fill it.

It didn’t take an economics degree to figure out the problem: truckers simply weren’t being compensated enough to entice and keep workers. Now a year and a half later the headline is the demise of one of America’s largest trucking companies – Yellow Trucking – and the end of 30,000 jobs they represent.

(Farm Journal)

Freight companies are struggling now with reduced demand, which threatens even more trucking jobs. At some point most of us begin to wonder about these alleged shortages. Adding to the muddled picture of jobs and pay is the historically low unemployment rate which emphatically illustrates how small the pool of potential employees is.

Related Story: Walmart Will Now Pay Starting Truck Drivers $110,000, Could It Backfire and Make the Nationwide Trucker Shortage Even Worse?

For trucking, which is often a career step up from entry wage employment, increases in the minimum wage by many states has helped low-wage employees keep up.

Since the pandemic, the surprising strength of low wage compensation compared to skilled or managerial wages removes some motivation for workers to consider a trucking job. Note the inversion after the pandemic of which income quintile is seeing greater wage increases.

Trucking companies have long dealt with astonishing turnover rates since the prospective employee pool was large and already qualified. New CDL licenses are issued to about half the current trucker numbers each year. Short-lived shortages are not limited to employees either.

Related Story: SHIP IT Act Could Save Truck Drivers Up to $10,000 and Cover CDL Costs

I started looking back at the numerous “shortages” and dire predictions of the last few years. At least some semiconductor chips, for example, are in now surplus, even a glut. We’ve discovered more new sources for lithium than anyone imagined. Ditto for copper, cobalt, and phosphates.

It appears markets can remedy shortages faster than we have imagined, and the few stubborn scarcities are sidestepped with alternative solutions. Not always, but certainly more than the hysterical headlines suggest.

There will always be warnings about trucker shortages, I suspect, but not from truckers.

What Ag Equipment Parts Are In the Shortest Supply Right Now?

Tue, 28 Feb 2023 17:44:02 GMT

The National Farm Machinery Show (NFMS) earlier this month revealed one major theme: the supply chain is still posing major problems for ag equipment manufacturers. Leaders within the ag equipment sector say the supply chain issues have been a major hurdle in bringing some new equipment to market, and the issue could persist throughout 2023.

“The supply chain challenges that we experienced in 2021 and 2022 are with us for a little bit longer,” says Curt Blades, senior vice president of agriculture services for the Association of Equipment Manufacturers (AEM) .

From Case IH to Deere and Company, the equipment manufacturers admit issues sourcing parts has been a constant headache.

“Absolutely, it’s been an issue. Supply chains have been highly disruptive in the last 12, 18 to 24 months,” says Jahmy Hindman, Deere and Company chief technology officer (CTO).

Hindman says in the constant conversations Deere is having with their supply chain base, suppliers are telling them the situation looks to improve the second half of the year.

“It’s progressively getting better,” Hindman adds. “Our third quarter and fourth quarter of last year showed us the improvement in our ability to deliver the products that are being ordered to the marketplace. I expect that to continue in the first quarter of this fiscal year for us.”

AEM also sees improvement coming later this year, which means farmers could still face months of supply chain constraints.

“Maybe by the end of the year, we’ll begin to see some return to normalcy, whatever normalcy looks like,” says Blades.

Parts in Shortest Supply

Today, equipment manufacturers across the world are grappling with the same problem. The supply chain issues are not only ongoing, but hard to predict.

“We had this level of challenge, maybe now it’s a little bit less, but we’re not out of the woods,” says Kurt Coffey, head of Case IH for North America . “It could be tracks one day, it could be tires the next day. We have a lot of very unique, high-value, custom castings, a heat-treated custom casting, that you can’t just go get, and it’s a very unique supplier.”

Castings are the latest supply chain headwind to hit. No matter the type of equipment, manufacturers are saying castings are a major hurdle right now.

“It’s a little bit of a whack-a-mole strategy when it comes to the supply chain,” says James Shurts, president of the ag division for Great Plains . “It’s always something new, and it just happens to be that castings are our current issue and the current challenges. But it’s always something different.”

AEM recently conducted a survey of its members, showing:

The most sought-after component are tracks (and their included components):
Only 27% of optimal inventory is available.
In both agriculture and construction sectors, semiconductors and chips are in short supply.
44% optimal inventory is available across both sectors.

“The other things that are interesting are like wiring harnesses, which oftentimes are made in the Ukraine, or seat cushions, which are made in Texas in areas that were destroyed by floods. It’s not one thing, it’s a collection of things,” says Blades.

Case IH says as the parts in short supply continue to vary, the company is finding unconventional ways to address the issues.

“The last year or two has been custom castings, chips, tracks, tires,” says Coffey. “We actually pulled strategic sourcing in and went on third-party markets to go buy chips from third parties, millions of dollars of chips from a third party, bring them in, ship them to our partner suppliers so we can keep our lines going.”

The Biggest Issue? Labor

No matter what item is in scarce supply, the problem is bigger than one part or company.

“The underlying issue with all supply chain challenges are labor,” says Blades.

AEM also surveyed 179 equipment manufacturer executives about the supply chain late last year and found:

98% still face supply chain issues.
58% are experiencing continuously worsening supply-chain conditions.

The AEM survey showed equipment manufacturers of all size are getting creative to address the challenges, which includes increasing their inventory and supplier base, creating a more vertical integration of supply chains, certifying alternative suppliers, as well as focusing more on supply chain reliability than price.

Growing Optimism

Despite the constant supply chain obstacles, leaders at both John Deere and Case IH are optimistic.

“We’re not just hearing that it’s progressively getting better, we’re sensing it; we’re feeling it,” says Hindman. “We’re also seeing it come through in our delivery. So, as long as things continue on that trajectory, I feel pretty good about next year.”

“We’re not out of the woods, but we’re certainly in a better place than where we were, let’s say, a year, year and a half ago,” adds Coffey. “But we’re just going to keep fighting to make sure that we’re ready for whatever the customers need from us.”

Optimism is growing in the supply chain, even with some bumps still ahead, as agricultural equipment manufacturers continue to navigate uncharted waters with the supply chain.

Related Story:

John Phipps: Is it Even Feasible to Bring the Production of Chips and NH3 Back to the U.S.?

What's The Biggest Supply Chain Headache Crippling Equipment Manufacturers Right Now?

Wed, 22 Feb 2023 16:53:02 GMT

Supply chain challenges consistently hit agriculture in 2022. While 2023 has brought improvement with fertilizer availability, a sector still fragile to supply chain issues is the farm equipment sector.

From tires and tracks, to a new problem with castings, leading equipment manufacturers like Case IH, John Deere and Great Plains all say the supply chain is still an issue.

“We’re conditioned to expect the black swans to the point where they’re no longer black swans, they’re just kind of inevitable disruptions,” says Sam Taylor, farm inputs analyst for Rabo AgriFinance, RaboResearch .

“The supply chain challenges that we experienced in 2021 and 2022 are with us for a little bit longer,” says Curt Blades, senior vice president of agriculture services for the Association of Equipment Manufacturers (AEM) .

Supply Chain Issues Projected Through 2023

During National Farm Machinery Show (NFMS) last week, booth after booth displayed the latest in technology and equipment, but leaders within the ag equipment sector say the supply chain issues are a hurdle in bringing new products to market.

“Absolutely, it’s been an issue. Supply chains have been highly disruptive in the last 12, 18 to 24 months,” says Jahmy Hindman, Deere and Company chief technology officer (CTO).

Hindman says in the constant conversations Deere is having with their supply chain base, suppliers are telling them the situation looks to improve the second half of the year.

“It’s progressively getting better,” Hindman adds. “Our third quarter and fourth quarter of last year showed us the improvement in our ability to deliver the products that are being ordered to the marketplace. I expect that to continue in the first quarter of this fiscal year for us.”

AEM also sees improvement coming later this year, which means farmers could still face months of supply chain constraints.

“Maybe by the end of the year, we’ll begin to see some return to normalcy, whatever normalcy looks like,” says Blades.

Parts In Shortest Supply

The most sought-after component are tracks (and their included components):
Only 27% of optimal inventory is available.
In both agriculture and construction sectors, semiconductors and chips are in short supply.
44% optimal inventory is available across both sectors.

The Biggest Issue? Labor

98% still face supply chain issues.
58% are experiencing continuously worsening supply-chain conditions.