Container crunch might be improving

A Saskatchewan pulse crop shipper says container availability remains sporadic. | File photo

North American exporters who depend on shipping containers see ‘light at the end of what has been a very dark tunnel’

It appears North America’s container supply squeeze may be starting to ease.

Bo DeLong, vice-president of the grain division of the DeLong Co., a U.S. grain company that ships soybeans in containers, said there has been some relief.

“It seems to be opening up a little bit,” he said during a webinar hosted by the U.S. Soybean Export Council (USSEC).

His sales department informs him that container loadings out of the United States are improving week by week.

He expects continued progress as China switches to buying South American soybeans in the coming weeks and months.

That should give the U.S. the breathing room it needs to sort out the container shortage issue caused by shipping lines sending empty containers to China to be filled with consumer goods heading back to the ravenous U.S. market.

“I’m hoping we’re through this by the time we get to next fall,” said DeLong.

Demian Gallego, director of trading and merchandizing with Global Food and Ingredients, a Saskatchewan pulse crop shipper, is also seeing some light at the end of what has been a very dark tunnel.

“We saw improvements in March and I think it’s getting a bit better,” he said.

“Definitely it has improved both in containers and rail over the past week.”

But the spotting of containers remains sporadic. A bunch will show up all at once and then there won’t be any for another three weeks.

He estimates there was a 70 percent reduction in the supply of containers in 2020, so there is plenty of room for improvement.

DeLong has witnessed similar container crunches three or four times in the past 15 years and the problem is always rectified by shifting economics in the shipping industry. However, that takes time.

“It’s going to be a month or two before we work ourselves out of it,” said DeLong.

One thing that would improve the situation is if buyers in Asia could turn containers as quickly as shippers do in the U.S.

In the past three or four years buyers have become complacent about emptying containers and getting them back in the system because there has been a surplus of the metal boxes, improved intermodal capacity and lenient demurrage and detention rules by shipping lines.

“A lot of the buyers have gotten to where they can take two to three weeks to unload those containers,” said DeLong.

“That really ties those boxes up.”

USSEC chief executive officer Jim Sutter agreed with DeLong’s recommendation.

“That’s a great way to increase the overall capacity of containers, is if you just make them more efficient and make them move faster,” he said.

The U.S. Specialty Soya and Grains Alliance said the container shipping crisis is starting to garner attention from government officials and mainstream media.

In late-February, the alliance and 70 other organizations sent a letter to U.S. President Joe Biden and U.S. agriculture secretary Tom Vilsack urging them to intervene in the crisis.

The letter said U.S. agricultural exporters’ access to international markets is being jeopardized by ocean carriers who are rejecting U.S. agricultural cargo in order to ship empty containers back overseas to keep up with the insatiable U.S. demand for consumer goods.

“Unless the Shipping Act and other tools available to our government are applied promptly, agriculture industries will continue to suffer great financial losses,” stated the letter.

“These carrier practices will render U.S. agriculture noncompetitive for years to come.”

Shortly after that letter was sent, twenty-four U.S. senators signed a letter to the Federal Maritime Commission expressing bipartisan support for its investigation into reports of unreasonable practices by ocean carriers.

A similar letter was signed by 111 members of the U.S. House of Representatives to ensure ocean carriers are abiding by the Shipping Act.

About the author

Sean Pratt & Brian Cross's recent articles

Markets at a glance

explore

Stories from our other publications