Container shortages aren’t expected to squeeze most U.S. grain and soybean exporters until early next year, but there are already signs of scarcity. Although inbound holiday goods are still delivering ample supplies of containers for Midwest exports, supplies will tighten as container carriers scale back their operations during the typically slow winter months, said Justin Cauley at agriculture marketing company Scoular.
“With the lack of naturally occurring inbound containers to (inland point intermodal) points and the strong demand for export equipment, we expect to feel the capacity tightness in Q1,” said Cauley, business unit manager at Scoular’s container export grain byproducts division.
Equipment shortages are far worse for agriculture railcar shippers, as a bumper U.S. corn crop and strong wheat and canola exports out of Canada are testing rail networks, according to Reuters and Bloomberg. The better availability of container equipment is attributable largely to that a small percentage of grain moves in containers — some 3.5 percent over the last three years. Most containerized grains are specialty or identity preserved products, or the cargo is boxed because it’s destined for buyers that can’t receive bulk carriers or don’t have the cash flow to purchase in bulk.
The 2013 U.S. harvest of grain and soybeans will total a record 573 million short tons, or 20.1 billion bushels, according to Informa Economics, a global agriculture research and consulting firm. This will push exports in the 2013-14 season, which runs Sept. 1 to Aug. 31, up 20 percent year-over-year to 3.9 billion bushels.
“The IPI points, like Chicago, are the first to feel the scarcity of equipment, but coastal container yards like LA-Long Beach and Newark (N.J.) will still have plenty of supply,” Cauley said.
Demand outpaced supply of 40-foot containers for outbound shipments in Chicago for the 20th straight week through the week of Oct. 23, according to the U.S. Department of Agriculture's weekly Ocean Shipping Container Availability Report. Increased transloading, healthy agriculture exports and moderate retail imports are likely the culprits, said Ron Sucik, president of RSE Consulting.
Approximately 30 percent of imports coming through the ports of Los Angeles and Long Beach are transferred from marine containers to domestic containers, meaning there are fewer 40-foot containers headed to the Midwest, Sucik said. The steady growth in exports of distillers’ dried grains and soy products also is making 40-foot containers scarce, and cautious retail shippers could be holding off on restocking ahead of the holiday season.
There hasn’t been any shortage of 20-foot containers, however, according to Ken Eriksen, senior vice president of Informa Economics. Soybean meal and DDG shippers could face trouble in securing 40-foot containers, he added.
“The import traditional peak was more of a speed bump this year, and in reality has become more that way in recent years with less consumer purchasing, better inventory control, and improved packaging,” Eriksen said. “As such, this does lead to less available container supply as back-haul, but given the number of containers used for grain and soybean exports, the market has not been too pressured.”
Mark Szakonyi contributed to this report.
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