Out of the box
Trade imbalance creates shipping container shortage
by Jaime Guillet
Major U.S. ports, such as Long Beach, Calif., are not being affected by a shipping container imbalance, but the Port of New Orleans, which is trying to grow its container business, is starting to feel the ripple effect. (Photo courtesy Port of Long Beach)ADVERTISEMENT
The hasty growth of exports from the United States coupled with the softening of foreign imports has shepherded a new trend in the maritime shipping world — a relative container famine.
The U.S. dollar’s decline in late 2007 and 2008 led to American exports rapidly increasing as other countries began gobbling up our cheaper goods. Foreign imports slackened as U.S. consumers halted spending.
This disparity resulted in an apparent shortage of the 20- and 40-foot steel cargo containers used for shipping on ocean vessels and rail lines.
At first glance, the dearth of containers resembles an overall global scarcity, but the real problem is containers are ending up in the wrong place at the right time, said Anne Kappel, vice president of the World Shipping Council, the national trade association of worldwide shippers.
“We have a trade imbalance right now,” Kappel said. “A slight shortage of containers is not necessarily a new phenomenon, but combined with new issues ... the difference makes everything tighter.”
While the problem hasn’t significantly affected container business at the Port of New Orleans, it is feeling the rippling effect.
The vast majority of imports entering the United States are finished consumer goods, such as tennis shoes and pencils, which manufacturers ship in containers. By contrast, the preponderance of North American exports is raw, unfinished goods such as lumber, grain and paper products.
A decade or two ago, most raw materials were shipped in break-bulk or not in containers. Today, they increasingly are being shipped in containers overseas.
When containers arrive in ports such as Houston and Long Beach, Calif., terminal operators unload them at the dock. The containers either go directly back on the ships to eventually return to their points of origin or sit as “empties” at distribution centers.
Exporters challenged
The container shortfall is primarily affecting U.S. growers, producers or manufacturers that want to export their goods out of the country but are not located where imported containers arrive, most often in highly populated urban areas.
“It’s less about how many (containers there are worldwide) and more about the flow for the U.S.,” Kappel said. “Physically there are boxes ... but there is still a significant imbalance — almost 2-to-1 imports to exports.”
The disparity can be seen even when looking at 2007 trade figures from the U.S. Maritime Administration. In 2007, the country received about 12 million containers via trade compared with the 6.8 million containers leaving the country.
“The change in U.S. trade patterns, an increase in export volumes coupled with slowing growth in some import corridors, has altered the historical patterns of equipment flows and balances,” said Bill Woodhour, North America sales manager for the Maersk shipping company.
Woodhour said while the U.S. remains import dominant overall, decreases in imports in some of its ports and the surge in exports have created the container imbalance.
“Overall, there is a sufficient supply of equipment in the U.S. to cover the export demand,” he said. “However, as a result of the changing equipment flows, there are some areas that require us to work closely with our customers to develop solutions to match the cargo with the equipment.”
Shifting services
Big-boy carriers such as Mediterranean Shipping Co. and Maersk Inc. that typically own their containers have adjusted to the tightened container demand by conducting “better forecasting and allocation of containers by carriers,” and requiring their customers to make reservations in advance, Kappel said.
Shippers’ customers, on the other hand, have started making multiple bookings with more than one carrier, which creates problems, she said.
“The manufacturer or exporter is trying to hedge their bets,” Kappel said. “It’s bad practice that’s been going on for a while.”
There are indications this trend of container shortages will alleviate as economies worldwide recoil following recent traumas to the U.S. investment markets.
Boston-based Global Insight, a consulting company that provides analysis of market conditions of more than 200 countries, recently projected U.S. container imports this year will decline 8.2 percent, a slightly more pessimistic forecast than Global’s previous projection of a 7.1 percent decline.
The revision is based mostly “on a deteriorating outlook for imports through the Gulf ports,” the company said in a statement.
On the positive side, Global increased its 2008 U.S. export growth forecast from 17.7 percent to 22.6 percent.
What does this trend mean for U.S. ports?
For major container ports such as the Port of Long Beach, where overall cargo figures are actually down, not too much, said spokesman Art Wong, adding that containers are going back on the ships or “too many boxes are sitting idle” at the port.
But at the Port of New Orleans, which is trying to expand its container business, it has had a slightly negative impact by requiring some U.S. exporters to consider carriers that do not serve New Orleans — all for availability of containers, said Robert Landry, the port’s marketing director.
“If you can’t get equipment, it’s a problem requiring some exporters to wait on available containers or forwarding it to another port,” Landry said.•
New Orleans City Business
Out of the box
Trade imbalance creates shipping container shortage
by Jaime GuilletThe hasty growth of exports from the United States coupled with the softening of foreign imports has shepherded a new trend in the maritime shipping world — a relative container famine.
The U.S. dollar’s decline in late 2007 and 2008 led to American exports rapidly increasing as other countries began gobbling up our cheaper goods. Foreign imports slackened as U.S. consumers halted spending.
This disparity resulted in an apparent shortage of the 20- and 40-foot steel cargo containers used for shipping on ocean vessels and rail lines.
At first glance, the dearth of containers resembles an overall global scarcity, but the real problem is containers are ending up in the wrong place at the right time, said Anne Kappel, vice president of the World Shipping Council, the national trade association of worldwide shippers.
“We have a trade imbalance right now,” Kappel said. “A slight shortage of containers is not necessarily a new phenomenon, but combined with new issues ... the difference makes everything tighter.”
While the problem hasn’t significantly affected container business at the Port of New Orleans, it is feeling the rippling effect.
The vast majority of imports entering the United States are finished consumer goods, such as tennis shoes and pencils, which manufacturers ship in containers. By contrast, the preponderance of North American exports is raw, unfinished goods such as lumber, grain and paper products.
A decade or two ago, most raw materials were shipped in break-bulk or not in containers. Today, they increasingly are being shipped in containers overseas.
When containers arrive in ports such as Houston and Long Beach, Calif., terminal operators unload them at the dock. The containers either go directly back on the ships to eventually return to their points of origin or sit as “empties” at distribution centers.
Exporters challenged
The container shortfall is primarily affecting U.S. growers, producers or manufacturers that want to export their goods out of the country but are not located where imported containers arrive, most often in highly populated urban areas.
“It’s less about how many (containers there are worldwide) and more about the flow for the U.S.,” Kappel said. “Physically there are boxes ... but there is still a significant imbalance — almost 2-to-1 imports to exports.”
The disparity can be seen even when looking at 2007 trade figures from the U.S. Maritime Administration. In 2007, the country received about 12 million containers via trade compared with the 6.8 million containers leaving the country.
“The change in U.S. trade patterns, an increase in export volumes coupled with slowing growth in some import corridors, has altered the historical patterns of equipment flows and balances,” said Bill Woodhour, North America sales manager for the Maersk shipping company.
Woodhour said while the U.S. remains import dominant overall, decreases in imports in some of its ports and the surge in exports have created the container imbalance.
“Overall, there is a sufficient supply of equipment in the U.S. to cover the export demand,” he said. “However, as a result of the changing equipment flows, there are some areas that require us to work closely with our customers to develop solutions to match the cargo with the equipment.”
Shifting services
Big-boy carriers such as Mediterranean Shipping Co. and Maersk Inc. that typically own their containers have adjusted to the tightened container demand by conducting “better forecasting and allocation of containers by carriers,” and requiring their customers to make reservations in advance, Kappel said.
Shippers’ customers, on the other hand, have started making multiple bookings with more than one carrier, which creates problems, she said.
“The manufacturer or exporter is trying to hedge their bets,” Kappel said. “It’s bad practice that’s been going on for a while.”
There are indications this trend of container shortages will alleviate as economies worldwide recoil following recent traumas to the U.S. investment markets.
Boston-based Global Insight, a consulting company that provides analysis of market conditions of more than 200 countries, recently projected U.S. container imports this year will decline 8.2 percent, a slightly more pessimistic forecast than Global’s previous projection of a 7.1 percent decline.
The revision is based mostly “on a deteriorating outlook for imports through the Gulf ports,” the company said in a statement.
On the positive side, Global increased its 2008 U.S. export growth forecast from 17.7 percent to 22.6 percent.
What does this trend mean for U.S. ports?
For major container ports such as the Port of Long Beach, where overall cargo figures are actually down, not too much, said spokesman Art Wong, adding that containers are going back on the ships or “too many boxes are sitting idle” at the port.
But at the Port of New Orleans, which is trying to expand its container business, it has had a slightly negative impact by requiring some U.S. exporters to consider carriers that do not serve New Orleans — all for availability of containers, said Robert Landry, the port’s marketing director.
“If you can’t get equipment, it’s a problem requiring some exporters to wait on available containers or forwarding it to another port,” Landry said.•
