Global regulations requiring the traceability of food products back to their origins are building momentum in the U.S. container trades, on both import and export shipments.
“There is increasing concern globally on all aspects of food safety and quality,” said Bruce Abbe, executive director of the Midwest Shippers Association in Minneapolis. “Consumers worldwide are demanding more safety in their food supplies, and this portends a bright future for containerized shipping, because the big bulk handlers, carriers, barges and unit trains aren’t equipped to segregate food shipments by identity.”
Major global markets, including Japan, South Korea and the European Union, already require that imports of food grains, meat and poultry be documented with certificates of origin. Those requirements are especially designed to identify genetically modified organisms, which cannot be imported as food, although they may be allowed as animal feed.
Soybeans produced in the U.S. are increasingly grown from genetically modified seeds, so they can only be used in these markets as animal feeds and are still shipped in bulk carriers. The requirements for identity-preserved food have accelerated growth in containerized soybean exports to the Asian markets in particular because of their enormous consumption of such foods as tofu and soy sauce.
“Containerized shipping is something we need because the customers require containers that are sealed at the plants color-sorted, size-sorted and of a very specific variety,” Abbe said.
All this has resulted in a substantial increase in containerized grain exports during the last decade. U.S. exports of containerized grain and related products increased sixfold from the 2000-2003 average of 1.1 million tons to the 2007-2010 average of 6.6 million tons, according to data from PIERS, a sister company of the JOC. Containerized grain shipments now account for less than 10 percent of all U.S. grain shipments, but are of higher value than bulk grain shipments and volume is growing from year-to-year. “It’s still small, but it’s steadily growing,” Abbe said.
The U.S. Department of Agriculture forecasts continuing growth in containerized food exports. In its weekly Grain Transportation Report for Oct. 11, it cited several reasons for the growth. “First, changing consumer preferences, including an increasingly affluent middle class in some developing nations, are demanding more and better quality food to include identity preserved grains. Second, recent governmental regulations require more complex labeling for agricultural products, such as genetically modified foods.”
The USDA report said containerized grain is ideal for ensuring identity preservation and individualized labeling based on variety and place of origin. In addition, the global recession reduced demand for overall containerized ocean freight, causing rates to fall, which allowed containerized ocean freight to compete with traditional bulk ocean freight, increasing intermodal business for railroads.
But Abbe said the railroads are not yet ready for more containerized grain shipments out of the Midwest. “I don’t know that the bulk-handling system that we have right now fully understands these trends,” Abbe said. “The big Class I railroads that have developed unit train-loading facilities out here on the plains are not focused on this, so we need them to concentrate on providing more containerized shipments.”
U.S. food imports are likely to become increasingly containerized as well because of the Food Safety Modernization Act, which was signed into law last year. It gives the Food and Drug Administration new authority to regulate the way foods are grown, harvested and processed. Shippers of food products from meat and poultry producers to Midwestern grain and soybean farmers are still waiting for the new regulations to understand how they will have to ship their products. But Abbe thinks those regulations will further fuel the growth of containerized food shipments when they are issued.