Grain shippers in the upper Midwest could once again struggle to get containers later this year, says an equipment lessor, if the peak shipping season in the eastbound Pacific is disappointing and the cost of containers remains high.
The difference between this year’s market and the equipment shortages of 2010 is that grain shippers will be able to secure the containers they need if they are willing to pay the price, said Jim Pratt, director of marketing at Triton Container International.
“Containers are available, but not plentiful,” Pratt told the Midwest Specialty Grains conference this week in Seattle. The conference was sponsored by the Midwest Shippers Association.
Exporters in container-deficient locations such as the upper Midwest and the Pacific Northwest struggle to get enough empty containers even when conditions are normal. A normal environment is marked by strong imports during the peak season, moderately-priced containers and a plentiful supply of empties controlled by ocean carriers and equipment lessors.
Going into the busy export season this fall, the price of a new container is about $3,000, compared to $1,500 in past years, Pratt said.
Container manufacturers in China virtually stopped producing new containers for more than a year during the 2008-09 economic recession. Although factories now are pushing out boxes, container manufacturers are proceeding cautiously because of the soft economies in Europe and the U.S.
Container availability for exporters also depends on a strong peak shipping season in eastbound Pacific because the containers carrying holiday merchandise from Asia are emptied and turned over to exporters. Imports were weak this summer, indicating the peak shipping season this fall could be disappointing.
Normally, carriers have a plentiful supply of containers on hand, which equates to about 2.5 containers for every slot on the vessels they operate. Carriers cut back on their equipment supplies during the recession, however, and they now have on average two containers per vessel slot.
Equipment lessors will be hard pressed to fill the gap. About 98 percent of containers owned by leasing companies already are leased out, an unprecedented figure, Pratt said.
In this environment, exporters of specialty grains and identity preserved grains in states such as Minnesota, Iowa and the Dakotas must communicate closely with ocean carriers, truckers and container lessors to ensure an adequate supply of containers, Pratt said.
They must also talk to railroads that serve their region about the cost of repositioning containers from metropolitan areas with equipment surpluses to their deficit regions. “Railroads are the key,” he said.