Exporters need more shipping containers

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

30 Jul 2008

At ports, a shortage of cargo containers seems about as unlikely as cardboard boxes suddenly becoming obsolete. The weak dollar has made U.S. goods cheaper overseas and has created a new wrinkle for the shipping industry: Containers are increasingly hard to come by. “The import volume has slowed down, so fewer boxes are coming in, and exporters are seeing more demand,” said Kevin Mack, a vice president at Newark, N.J.-based Columbia Containers. “I’ve been in the business for 25 years, and this is the first time I can remember this happening.”
While most containers come into ports on the East Coast, the Midwest can’t find enough of them to handle the rising exports of grains, soybeans and corn bound for overseas markets.
“It’s all logistics,” said Sherif Gendi, who arranges U.S. grain exports for the trading company Marubeni America in New York City. “The containers,” he said, “aren’t getting to where they’re needed.”
That’s because moving empty containers around is an expense no one wants to absorb.
When a company adds fuel surcharges to the expense of moving an empty container, it becomes a “serious cost,” said Joe Alagna, an executive with China Shipping. On average, the cost of taking an empty container for a one-way ride to Chicago could be more than $1,000.
“The prevailing theory is that by the time you pay to move the empty to the Midwest, it’s a loss,” he said.
The supply problem in the Midwest has left giant food processors, trading companies and shippers scrambling to fulfill delivery schedules. And once they succeed in finding containers, exporters still have to secure space on outgoing ships, which also is getting more difficult as export levels climb.
“Virtually every space on every ship is full,” said Peter Friedmann, executive director of the Agriculture Transportation Coalition in Washington. “It’s a real crisis, because only so much disruption can occur before customers start looking somewhere else.”
Philip Damas, head of container research at Drewry Shipping Consultants in London, said the situation is forcing Midwest exporters to plan as much as six weeks out to ensure they have both the containers and the ship capacity necessary to transport their products.
In some cases, exporters are taking drastic steps, warehousing their goods until they can get containers, reserving more containers than they need and moving their goods hundreds of miles by rail to ports with available containers.
“It’s getting very expensive, and it’s slowing down the export process,” Damas said.
At the same time, containers aren’t coming into the United States at the same volume they were a few years ago. The weak U.S. economy has led to a slowdown of imports, requiring fewer containers.
The Midwest’s hunt for containers has led plenty of exporters to send goods — such as corn and soybeans — in rail cars, where they’re then moved into containers.
Ultimately, some industry experts think the search for containers could lead shippers to the container depots, where boxes piled up as the nation was flooded with more imports than exports.

Source: The State