2012 was a booming year for the US dairy industry, in terms of international shipping exports. With prices for dairy products (like milk, cheese, butter, ice cream and more) increasing, the Wall Street Journal reports that US exports increased nearly 13% in a decade. As a result, dairy production companies have increased their capacity for milk products by as much as 25%. And thanks to freight forwarders, the dairy production companies includes 15.6% of their milk products for export, which is a new high. As a result of the expanded overseas markets available to the US dairy industry, companies are investing hundreds of millions of dollars into new plants to produce more dairy products.
A major source for the US exports included China. A 2008 milk scandal in China, which resulted in harming 300,000 people because of contaminated milk, has opened the market for US dairy makers. However, by 2014, Chinese companies began to compete with the US by taking away parts of their market. By 2014, US dairy exports to China declined.
A major reason for the dairy export decline includes lower prices for international milk powders, such as prices as low as half the original price. The demand for dairy products around the globe also decreased. For US dairy production companies, this risk goes with the territory.
The good news is that US dairy exports reached a record of over $6 billion in 2014. As we look to 2015, dairy prices should improve. And US dairy companies will also target countries for export like Mexico, Malaysia, Indonesia and the Philippines. As the industry improves in 2015, it would be wise for the companies to lock down on a good ocean freight shipping rate now.