Soy transportation expert weighs in on Section 301 impacts

May 1, 2025 | Bethany Baratta

The proposed tariffs on vessels that are Chinese flagged, operated or built in China impact the opportunity for farmers to transport their soybeans to customers around the world.

The Soy Transportation Coalition (STC), comprised of 14 state soybean boards, including the Iowa Soybean Association, the American Soybean Association and the United Soybean Board is watching the issue closely. STC’s participating states encompass 85% of total U.S. soybean production. Its goal is to position soybean industry stakeholders to benefit from a transportation system that delivers cost effective, reliable, and competitive service.

In a conversation earlier this week with Sarah Muirhead of Feedstuffs, STC’s executive director Mike Steenhoek noted what the situation means for farmers and for exports.

The following is a condensed version of the conversation.

What’s the issue?

Steenhoek: This really originated last year with a number of plaintiffs submitted to the USTR office to investigate Chinese shipbuilding and whether that country has historically engaged in a number of unfair practices in order to stimulate that industry. Clearly over the last 25 years, it has been an industry that the Chinese have heavily emphasized and something they want to be very influential in. The results speak for themselves: now over 50% of ocean vessels are produced and manufactured in China.

So what?

Steenhoek: The USTR initiated an investigation and came to the conclusion that Chinese activity has artificially stimulated that industry to the detriment of the U.S. economy. They (USTR) made a number of decisions that were originally advertised and communicated to the public in February of this year. Those decision fall into two baskets: to impose punitive measures on Chinese shipbuilding industry and stimulate U.S. shipbuilding.

There was a comment period unleashed. With the exception of the plaintiffs, the feedback was overwhelmingly negative—that this would be harmful to importers and exporters like U.S. agriculture.

How did the soybean industry engage in this issue?

Steenhoek: In agriculture, we don’t have an objection to the goal of stimulating U.S. shipbuilding; that’s a laudable goal. But whenever you have a goal, the elementary next question is what is the appropriate implementation period or time horizon in order to achieve that goal? That was the concern we had—that these policies that were being advertised were very punitive and some of these fees that were associated with shipping—our concern was that in the effort of trying to promote a Made in America industry, shipbuilding, you are going to simultaneously harm other Made in America industries—agriculture and others.

What was the response?

Steenhoek: USTR office recently amended those policies and those recommendations. They are considerably better than they originally were, … a step in the right direction, but real concerns that we have are these fees that are still involved in shipping.

When it comes to government policy on promoting transportation, I would like the government to really focus on subtraction math. How can you reduce the cost of getting product from Point A to Point b, particularly if it’s international? When you engage in subtraction math, you make us more competitive in the global marketplace. When you do addition math, adding cost to our supply chain, you’re less competitive.

How is it affecting profitability of U.S. farmers with the rules as they stand currently?

Steenhoek: It’s very much a step in the right direction, but still some challenges. They will exempt from these fees if it’s a Chinese-made vessel, if it’s owned and operated by a non-Chinese entity—another European country, a company, others. But they will not exempt from fees if it’s a Chinese-build vessel but it’s owned and operated by a Chinese entity. There’s a considerable number of ocean vessels that handle U.S. soybeans and U.S. grain serving our export market that do fit that category that are owned and operated by Chinese entities.

To avoid that fee, those vessels are essentially going to be removed from the viable pool of ocean vessels to transport U.S. commodities. So you have a smaller pool, but now you’re going to have a given amount of freight that still remains competing for that pool, the evitable outcome will be higher rates when it comes to transporting our exports.

Analogy: Imagine that you have a 747 Jumbo Jet positioned on an aircraft carrier with the expectation that the 747 would be able to take off from the aircraft carrier. The result would be that 747 falling into the ocean—you need about 10,000 feet of runway for a 747 to be able to take off. The fact that the 747 would land in the ocean is not the fault of the 747 or the aircraft carrier, the fault would be that there was an unrealistic expectation imposed on the two. That’s the concern we have. We don’t have a problem with trying to promote U.S. shipbuilding. It's just that there’s an unrealistic expectation in order to achieve that. The time horizon is not nearly appropriate. In the effort of trying to promote that industry, you’re going to harm other industries like agriculture.

What is a good timeframe?

Steenhoek: It’s in the years kind of category. To increase your shipping capacity, you need to have shipyards. In order to have shipyards, you’re going to need to know where you’re going to put them and have available land to do that. You need a workforce to service shipyards and be the mariners on the ocean vessels they’ve built. You have to build the ocean vessels themselves, which can take a few years. China, with its central planning regime, got to where they are from basically minimal amount of shipbuilding to being the dominant supplier in 25 years. And that’s with a centrally-planned economy, where government says ‘you’ll do that.’ And without any kind of environmental barriers or obstacles.

What’s happening at the ports? Port traffic is reportedly down considerably.

Steenhoek: We’re seeing that there are very few vessels being loaded in China with the U.S. as its destination. You can back up from that knowing that really starting next week you’re going to really see a major downturn in the amount of ocean vessels arriving to the United States, particularly from China. The Port of Los Angeles estimates a 35% decrease from last year. You kind of rollback from that that will be about 5-7 weeks before you really see the impact on department store shelves where you’re seeing less inventory because it takes time from when it gets unloaded at the port to eventually make its way into the retail channel. Right now it’s more of a theoretical to a lot of people, but with increasing time, it’s definitely going to become more real.

Transportation depends on not only on things coming in, but transportation taking things out as they come in. What’s the strain on farmers from a commodity standpoint? There won’t be ships to take commodities to other parts of the world, right?

Steenhoek: It’s going to be a significant concern. Whether it’s soybeans, soybean meal or DDGS, most of that goes out in bulk vessels, but there is a percentage of that that goes out via containers. In order to be able to take advantage of that supply chain option, you have to have front haul movement. We’re the back haul movement back to Asia and other countries, so if all of the sudden you’re having a dramatic decrease in imports coming into the United States, there’s going to be a curtailed opportunity for exporting back to some of those other countries. This is going to be something that impacts a lot of different aspects of agriculture.

What about trucking and rail standpoints? Any trickle-down effects that would also impact those entities?

Steenhoek: If you’re having a significant decrease in imports coming into the United States or exports leaving the United States, that’s going to have a real impact on rail service, trucking. Those who are in the supply chain industry are very worried about a significant decrease in volume getting moved around the country.

What else are you watching for soybean farmers on the transportation front?

Steenhoek: The tariff issue is certainly a notable one. Farmers were among the earliest of international entrepreneurs because there was this recognition decades ago by farmers that we as a country can grow more food than we have the ability to consume. Farmers naturally turned their attention to the international marketplace and they worked very diligently for years to build, establish and maintain these markets and it’s worked out wonderfully for U.S. agriculture and international customers because many of these don’t have the ability to meet their own protein and nutritional needs.

The long-term concern is arguably even more menacing to our industry. In 2018-2019, during the last trade dispute with China, China invested billions of dollars in Brazilian infrastructure. That investment in Brazilian infrastructure by China had been occurring, but it got turbocharged with that 2018-2019 trade dispute. Even if you have this great reconciliation between the two countries—United States and China—what China would say is, ‘I’m glad we’re getting along once again, but you know that billions of dollars in investment in Brazil that we made? We’re going to continue to use it.’

You can have these temporary trade disputes result in long-term change in trading patterns. The United States has prided ourselves for years for being the most cost-effective, reliable, dependable supplier of food on the global marketplace—that’s a reputation that we achieve through lots of hard work by farmers and others for many, many years and now that good reputation is being questioned.

It takes time to reconstruct/revive that infrastructure

Steenhoek: When you look out the windshield of your industry, you don’t just care about what the next 50 feet will provide. You have to know what the next mile, 2 miles, 10 miles, what the forecast is for that. That’s really important to have that kind of certainty, predictability.

When it comes to government policy in trying to support industries like agriculture and others, I’d rather have government policy be predictably good than sporadically great. You can’t build an industry around that; you have to have predictability. That’s something we really do implore our elected leaders to take into account.

In the midst of having some of the challenges—we legitimately have some concerns and challenges between countries like U.S. and China and other countries around the word. But when you have disputes, it’s wise to also consider within the relationships the good things that are happening. If there are good things that are happening, let’s try to encourage, fortify and improve the good things while simultaneously working to address the challenges and arguments that may need to occur. One of the good things happening if that you have farmers who are growing food and helping supply protein and nutritional needs of a variety of countries including some countries we are at odds with, including China. That’s a good thing. We want to continue that, we don’t want to disrupt that in any way.

It's my hope that we can address these legitimate disputes that we have while protecting the good things that are happening—one of the good things at the top of that list is farmers growing food for other countries.

For the full interview, click this link.

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