WINNIPEG – The global economic crisis could prove a boon for shipments of containerized grain out of Western Canada, says a transportation expert.
Barry Prentice told a conference last week that while it might seem odd, the economic downturn could provide new opportunities for prairie container shippers.
“There’s going to be a big incentive for container shipping lines to look for backhaul to Asia,” he said.
The slowdown in the North American economy will mean a decline in the volume of containerized products being shipped, which will result in lower ocean shipping rates from Asia to North America.
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Those shippers will likely have more unused container space and will look for products to haul back to Asia to help cover costs.
That hasn’t been the case previously because shippers were so busy they could afford to ship back empty containers and the backhaul rate was high.
That’s all changing.
“They’ll be looking for revenue wherever they can get it,” Prentice said in an interview after his remarks to the conference.
“They’ll have excess capacity and they’ll be looking to see how they can maximize total movement and revenue both ways.”
That could include wood products, potash and grain.
Prentice added it’s not just a matter of freight rates, but also the willingness of container shipping lines to accommodate grain shippers by placing their containers at inland points for loading.
“I think they’ll be more inclined to ship from inland just to get more traffic,” he said.
Prentice said he recently received a call from a major shipping line in Beijing, China, asking him for all the information he could provide about containerization of grain.
In his presentation, Prentice said that aside from current economic conditions, other factors are increasing interest in containerized grain.
The internet and new computer technologies are reducing the costs of tracking container shipments, the costs of containerization are declining with double-stacked trains and bigger ships, and containers offer excellent identity preservation, traceability and security.
He said regulatory barriers still need to be removed to allow the industry to develop, including standardizing container regulations between Canada and the United States, removing container shipments from the rail revenue cap and reducing the number of inspections as containers move through the system.
Richard Wansbutter, vice-president of commercial relations for Viterra, said containers work well in certain circumstances, noting Viterra ships about 10,000 container cars a year, mainly carrying peas to markets in Asia.
However, he said the key question is what the customer wants. Some like containers, but many more are set up to receive product in bulk.
