Export Containers Tightening
WASHINGTON - Oct 6/11 - SNS -- Exporters in the United States should have few problems meeting container needs during the peak shipping season, but that could become harder once it ends, warns the USDA's April Taylor in the latest Grain Transportation Report.
"Container availability for U.S. exporters is expected to be adequate through the end of the U.S. peak shipping season which traditionally runs from July to October," Taylor wrote.
"However, slow import demand, higher prices for newly built containers, and an overall constrained global container supply will likely make finding containers in the months following the general peak season difficult, when containerized grain exports often hit their annual peaks."
The peak shipping season is known to be busy for import containerized cargo bringing consumer products from all around the world, but mostly from Asia. U.S. retailers are stocking up on back-to-school supplies and merchandise for the holiday season from October through December.
"In an ideal situation, the influx of import containers provides a healthy pool of available containers for export cargo," Taylor said. "This year's peak season has been lackluster as a result of slow demand for retail import cargo.
"In addition, carriers are facing a smaller global supply of containers and increased prices for newly built containers. All of these circumstances combined could lead to container shortages for U.S. exporters, particularly those at inland locations, at the end of the year and during the first quarter of next year."
Recession Fears
Fears of another recession are likely keeping U.S. retailers from buying excess inventory, keeping import trade slow for this time of year. Port container statistics through the major U.S. West Coast container ports in August were below last year and most saw volumes from July decrease as well, with the exception of Oakland, CA, and Los Angeles, CA, indicating that the peak season has been slow.
According to the Drewry Container Rate Benchmark report, average freight rates for containerized imports have fallen during most of September, after an increase in early August, also indicating slow demand for U.S. imports and fewer containers for the export pool. Oversupply in the vessel fleet is also keeping downward pressure on rates.
Carriers began the season with fewer containers in the overall global supply. Industry exporters at the Midwest Shippers' Association Annual Specialty Grains Conference in August reported that the global supply of containers has fallen over the past couple of years due to the yearlong closure of Asian container manufacturers as a result of recessionary pressures.
The manufacturers have been slow to come back online; plants had to be restarted and employees reestablished. Only recently have carriers reported that these plants are back to normal production schedules. In the meantime, container supplies were reduced. As a result, demand for new containers is strong and prices have nearly doubled in response to the overwhelming demand. This has led carriers to buy only what is necessary in what is considered an uncertain market.
As the peak shipping season tapers off and winter sets in, finding containers for export will probably be a challenge. Even though imports typically slow toward the end of the year, containerized grain exports are strong into the New Year and through the first quarter.
On average, the busiest months of the year for containerized grain exports are March, February, November, and January (see figure above). In fact, ocean container carriers in the Westbound Transpacific Stabilization Agreement (WTSA) have recently announced rate increases for grain and other agricultural exports effective November 1 in expectation of increased demand.
Because imports are slow and demand for exports is relatively high, this is traditionally the most difficult time of year for exporters to find containers, particularly for containerized grain exporters in the middle part of the country
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