Bill Mongelluzzo | Jun 05, 2009 10:01AM EDT
U.S. exporters will see ongoing equipment shortages in the months ahead, and the container shortages could become even worse if imports from Asia do not pick up significantly during the peak shipping season.
The equipment imbalance is occurring at an especially bad time for shippers of agricultural products because exports are starting to pick up after a lackluster first quarter. If exporters can not secure more empty containers for their products, the export boom will be snuffed out before it gathers steam.
Agricultural exporters in the U.S. interior are at greatest risk. "Eastbound cargo isn't delivered where westbound cargo is loaded," Brian Conrad, executive administrator of the Westbound Transpacific Stabilization Agreement, told the annual conference of the Agriculture Ocean Transportation Coalition.
There are plenty of empty containers at large import gateways such as Los Angeles-Long Beach and New York-New Jersey, but those ports are located thousands of miles from where export commodities such as grain and cotton are grown.
In the past, ocean carriers would absorb much of the cost of repositioning empty containers from population centers on the West and East coasts to the grain silos and cotton mills in the interior. However, shipping lines are losing millions of dollars during the global trade recession so they have no margins left to subsidize the movement of empties.
Railroads are not helping the situation either, Conrad said. "There are no price breaks on repositioning empties," he said.
The equipment problems are further aggravated by the plunge in imports. Orient Overseas Container Lines now handles in the trans-Pacific 1.2 imported containers for every container that is exported, said Ed Zaninelli, vice president of the westbound trade.
The normal ratio is at least two imported containers for every exported container, and that ratio in the past would increase to three-to-one during the summer-fall peak-shipping season. With imports in the doldrums, there are insufficient empties available for exports.
In fact, the situation in the Pacific Northwest is so out of line that exports in the first quarter of 2009 exceeded imports, resulting in a shortage of empties in that region.
Zaninelli noted that exports dropped precipitously in the first quarter of the year as overseas demand for commodities and for consumer goods disappeared. "January didn't even happen," he said.
However, exports have bounced back in recent weeks, while imports remain weak. Exporters' only hope for equipment availability will be if imports follow traditional seasonal trends and increase sharply this summer and fall.
"Once eastbound picks up, equipment will be more available," Zaninelli said.
Contact Bill Mongelluzzo at bmongelluzzo@joc.com.
