Our ports are the heart and bloodline of our economy in southeast Louisiana. Albeit the trade wars we find ourselves in have laudable goals, there are many downstream implications that will impact our ports and our local economies as a result. We all know China’s predatory trade practices have disastrous outcomes for certain sectors here at home, but China has always wondered if we would be willing to inflict pain on ourselves to fight back. In many respects, we are now in uncharted territory. Healthy trade begs for cooperation and certainty.
A recent report says there’s been a 25% drop in bulk cargo for the port of New Orleans and a 15% drop for the Port of South Louisiana. What effects could tariffs have on expansion plans for our ports, and the economic health of our state?To help answer those questions and more, Newell was joined by Port of New Orleans Vice President and Commercial Officer Robert Landry, Port of South Louisiana Executive Director Paul Aucoin, and Soy Transportation Coalition Executive Director Mike Steenhock on Thursday’s program.
“Mike, the soy industry is huge in Louisiana and across the South,” Newell began. “When we think about the trade war we are in, what have been the short and long term implications so far?”
“China is by far our number one destination for US soybean exports,” Steenhock answered. “When you look at the field of soybeans in the US, one third of what you’re looking at is headed for China. So when you have a dramatic pullback from that one customer, that has significant impacts on the profitability of soybean farmers. The USDA has stepped in to help with aid payments. But then in the long term, when you start establishing yourself as being less reliable, that has consequences. The long term consequences are going to be more harmful than the short term ones, disagreeable and as painful as they’ve been.”“Commodities are not as easily replaceable as consumer goods,” Newell said. “Now Brazil is the alternative for soy. Are we concerned that trade relationship could impact us in the long term?”“Certainly,” Steenhock said. “We have the reputation of growing the best soybeans in the world, but other countries can do it as well. When we send a signal that we are less reliable, Brazil starts growing more, setting aside more land for soybeans, China starts investing more in infrastructure there. Once those systemic changes are made, even if you have a grand reconciliation between the US and China, that doesn’t just snap back like a rubber band. That’s the real concern we have.”“Robert, when we think about balance and certainty, it begs of us to re-evaluate where we are on a daily basis,” Newell continued. “Is that a process that the Port of New Orleans goes through every day?”
“Yes, we review it every day,” Landry said. “We were excited this morning to see China is going to reduce some tariffs and that represents a thaw in our trade with them. It’s cogent to recognize we aren't just talking about China when we talk about trade issues. We’re seeing decreases in cargo at the Port because of issues with South Korea, Turkey… a lot of other countries are involved. There’s an interconnectedness to all these trade talks. In regard to soybeans, that’s very critical to people up and down the river. When steel comes into the Port of New Orleans, that steel is put into barges and they go upriver. Once that steel comes off the barge, those same barges are loaded with grain to come back down to the lower Mississippi. If they don’t make it up to the Midwest full of steel, somebody has to pay to move that barge up to load the grain, and that increases costs and makes us less competitive. You open up avenues for people to start purchasing elsewhere and perhaps never come back to the US.”
“People don’t realize how many downstream implications there are in this industry,” Newell said. “There are trickle down effects everywhere, and it;’s amazing how much of it has impacts right here in South Louisiana.”
