Scoular's Tom McKenna Shares Container Knowledge with Readers of Corn and Soybean Digest
October 1, 2011
“Containers Move High-Value Exports”
An Excerpt from Corn and Soybean Digest
“Container shipping still handles only a small share of U.S. grain exports, but it’s proving its worth for transporting value-added grains, oilseeds, and feed ingredients.
Containers have been used for 30 years to ship grain in situations where preserving the shipment’s identity is essential. Their use has increased in the last seven years, not only for identity-preserved (IP) cargos, but for commodity grain.
Still, containers generally comprise less than 5% of the grain trade, in part because several factors determine whether a container shipment is economically viable.
Tom McKenna, who manages an IP corn program for The Scoular Company, explains: “Where the steamship lines make their money is on the head haul (bringing goods to the U.S.), so they need their containers returned as soon as possible. On the back haul to Asia, they’ll take waste paper, scrap iron, or grains if possible, but the head haul drives the situation.”
Because a quick return is so important, containers are shipped back empty if no convenient backhaul cargo is available. That explains why containers are not readily shifted to serve markets like Mexico. The profits involved don’t sufficiently outweigh the cost of a delayed return.
Shipping commodity grains in containers “is a pure price issue,” says McKenna. “The bulk-grain business always wants to drive to the lowest cost. If the economics call for shipping grain ‘in a can,’ then you do it. Otherwise, the best way to export high volumes is bulk.”
McKenna cites two situations when containers work well: just-in-time shipping and shipping to ports that can’t handle Panamax vessels. “We’re now seeing a lot of furniture coming by container from Vietnam, so it’s becoming a good place to send containerized grain. This market changes all the time.
“But containers can’t supply the world’s need for an ocean of grain,” he concludes.
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