Grainnet

This article is reprinted from the USDA's July 9 Grain Transportation Report.

The economic crisis caused containerized grain exports during the first 4 months of 2009 to fall to nearly 92,000 20- ft equivalent units (TEU’s)—52 percent lower than the same period in 2008, when exports reached record levels (February 2008 saw more than 52,000 TEU’s moved).

Shipments reached the lowest levels during January and February, but by March and April, volumes were on an upward trend reaching early 2007 levels.

Shippers, however, report continued challenges to find sufficient container equipment.

Rates have also trended up slowly, but remain competitive with bulk ocean freight rates.

Container Availability

Overall, the availability of containers was tight throughout the Upper Midwest during the first and second quarters.

According to shippers, the situation grew progressively worse from the beginning of the year. Shortly after the New Year, containers were available in popular transportation hubs for containerized grain exports such as Chicago and Minneapolis.

However, as the year progressed container supplies tightened. Import traffic continued to fall, constraining container availability for export movements.

At present, container availability remains tight.

According to the shippers, carriers appear to be relying on the import containers to supply the available container pool for exports.

This tight supply results in shippers not getting enough containers when they need them.

Carriers report that the inland transportation costs are too high to reposition sufficient empty containers to the Midwest.

As a result, containers are being rescheduled to the next available vessel sailing and shipments of multiple containers are being split between vessel sailings.

Shippers are hoping the summer season will bring the start of stronger import traffic and therefore a healthier supply of containers for export movements.

However, carriers recently announced steep rate increases for the eastbound trade, which could keep import traffic depressed.

A presenter at the Agricultural Transportation Coalition’s Annual Transportation Conference held June 4-5 reported that almost 11 percent of the global container vessel fleet is sitting idle as of April 2009, up from near 5 percent in February.

These idle vessels constrict capacity and contribute to the lack of container availability for agricultural shippers.

Rates

In the past year, rates for containerized shipments have risen to record highs and fallen to near record lows.

Currently rates are nearly half of last year’s record high rates, but still 30-40 percent higher than the low experienced at the beginning of the year.

Effective July 1, some shippers absorbed rate increases from ocean carriers attempting to reclaim lost revenues from fallen demand and rates in the transpacific trade lanes.

In addition, bulk ocean freight rates have been fairly low allowing grain shippers to use either bulk or container at fairly stable and competitive rates.

Strategies for Finding Available Containers

For grain shippers, the choice remains to either bring the product to the containers (at the ports) or to pay extra to have a container repositioned to an inland origination point.

Transload facilities are available to gain access to the more abundant number of containers at ports in Southern California and the Pacific Northwest.

This option is more suitable for shippers that can use bulk style transportation; shippers of identity-preserved grain have limited transload options.

Experts in the industry recommend that shippers plan well in advance by booking space on a vessel 2-4 weeks in advance.

Also consider the use of freight forwarders or Non-Vessel Operating Common Carriers to increase your chances of acquiring sufficient containers.

One shipper recently encouraged the idea of increasing inventories abroad to guarantee consistent supply to the customer.

For more information, call Surajudeen (Deen) Olowolayemo, USDA, at 202-690-1328.

See Related Websites/Articles:

• USDA Grain Transportation Report

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