Port of Longview officials remain optimistic that in the short-term the local port can weather the U.S.-China trade war, which escalated this week with China’s decision to halt purchases of U.S. farm imports.
However, if the trade war stretches long into the future, the port could take a big financial hit, as China is the port’s second largest importer of grain.
Grain is the No. 1 commodity exported from the ports of Longview and Kalama, which are part of the larger Columbia River system. That system is the world’s third largest exporter for grain, according to the Pacific Northwest Waterways Association, a group of ports, businesses, public agencies and individuals.
In Longview, those commodities are handled by Export Grain Terminal (EGT), the port’s Berth 9 tenant.
EGT is the port’s largest “anchor tenant,” said port spokeswoman Ashley Helenberg, and “bulk agri-products” like wheat, corn and soybeans account for 70% to 80% of the port’s total shipped tonnage.
Already, the U.S.-China trade war has negatively affected the port. Columbia River grain exports have dropped dramatically since the trade war started last summer, and the Port of Longview reported in May that its soy and corn exports have declined 65% in that same time.
China’s decision to cease importing U.S. farm products came after President Donald Trump last weekend announced another round of tariffs on Chinese imports. The decision will mean local ports will need to fill the void of losing the largest global soybean trade partner.
“It’s going to be very challenging … (China) represents somewhere near 60% of the global soybean trade,” said Augusto Bassanini, CEO and President for the United Grain Corp., which is based in Vancouver. “There is no other country like China that demands that type of market share.”
Bassanini said ports — and other players in the grain export community — can look to other countries to ship their products. However, “because of the sheer share that China demands, we just won’t be able to substitute the void that will potentially be left behind if we don’t find a resolution soon.”
In the short-term, the Port of Longview is optimistic that it can fill the gap left by China with other trade partners. EGT officials were unavailable for comment Tuesday, but Helenberg said the company has “other strong trading partners around the Pacific Rim.”
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“I think that will help defray the impacts (of the trade war),” she said.
The port also has a “diverse cargo mix,” including products outside of the grain market, which can potentially offset lost revenue in grain exports, Helenberg said.
“Right now we are seeing an uptick in wind (turbine cargo), so hopefully any impacts suffered in one commodity area can be supported and supplemented by an uptick in commodities in another area,” she said. “We work hard to invest in a well-rounded infrastructure system that can adapt to changing commodities.”
But if China continues to bar U.S. farm imports, the port might feel strains on its overall financial health.
“Over the long term, (the trade war) would affect what kind of projects the port can do and the overall financial health of the port,” Helenberg said. “EGT is our largest anchor tenant, so anything that hurts EGT hurts the Port of Longview financially.”
Officials with the Port of Kalama, which also handles grain at two leased terminals, could not be reached for comment Tuesday.
Trade tensions between China and the U.S. kicked off last summer, when President Trump first imposed an import tax on $50 billion worth of Chinese goods. He later added more tariffs for $200 billion worth of Chinese goods.
China retaliated with its own tariffs, and, in some cases, stopped importing U.S. products, including Washington-grown wheat.
“We are hopeful that the government will be able to work toward a trade agreement soon. The uncertainty is what’s difficult, not only for the farmers but for the ports,” Helenberg said. “We base our budgets on revenue generating facilities like EGT, so we right now have to be extra diligent about watching the bottom line and adjusting course in response to the uncertain global economy.”