Shipping Container Shortage Plagues American Exports

As every wannabe titan of global industry knows, the value of the US dollar has fallen precipitously in recent months relative to other benchmark currencies like the British Pound, the European Euro and the Japanese Yen.  That's bad news if you're an American planning a vacation in London, Paris, or Tokyo. But if you happen to be in the export business, it's a huge opportunity. The dollar's decline makes American-made products significantly cheaper — and more competitive — on international markets, but as the Wall Street Journal reports, a shortage of shipping containers has created big headaches for US exporters. In order to sell the goods, you need to be able to move the goods, but you can't move the goods if you can't find enough shipping containers.  The WSJ says:

Finding enough of the big metal boxes used to be a cinch, because the nation's massive hunger for imports meant they were constantly arriving and stacking up from Long Beach, Calif., to Long Island, N.Y. Shipping companies typically scoured the country for anyone willing to fill outgoing boxes. But with the slump in the value of the dollar making U.S. goods more attractive to foreign buyers and many overseas economies continuing to hum, the tide has shifted in recent months. Trade figures being released Thursday are expected by many economists to show further growth in exports.

Shipping containers -- and the way they're handled -- reflect how the U.S. interacts with the global economy, which is one reason the problem has emerged now. For years, the U.S. crafted a trading system that was designed to pull in masses of imported consumers goods such as sneakers and VCRs as efficiently as possible from countries like China. Far less was expected to flow the other way.

What has happened now has thrown a wrench into the works. Cutbacks by U.S. consumers have slowed the growth of imports, while the weak dollar is making the U.S. into an export machine. Meanwhile, the places where most of these exports are originating are far from where boxes are being unpacked and soaring energy costs make it too costly to just load them on trucks and move them around.

"There are some places, particularly in the Midwest, where there's a complete lack of containers," says Philip Damas, the head of container research at Drewry Shipping Consultants in London. [...]

Analysts say shipping costs are rising, too. Mr. Damas, the London-based consultant, says the cost of shipping a 40-foot container from the West Coast to China is now $1,500, up at least 20% in the past year. In many cases, boxes that previously would be sent to inland locations never leave the coast.

The problem surfaced about six months ago and can be traced to a confluence of factors, beyond the slump in the dollar. For one, the global commodity boom has increased the cost of shipping items by bulk, which in turn has pushed more goods into containers.

It doesn't help that containers don't tend to flow to places that make most U.S. exports. More imports to the U.S. are consumer goods, which are often unloaded near retailers and warehouses in large cities, including Los Angeles, Chicago, and New York. In the case of Chicago, many containers come off ships from Asia and onto trains destined for "inland" destinations. But U.S. commodity exports, such as cotton and corn, are grown far from those hubs.

LINKS:
Container Shortage Puts U.S. Export Boom in a Box (Wall Street Journal, April 10, 2008. Supscription required)

Big Metal Box (Flickr group devoted to photos of shipping containers, container terminals, container ships, and container-based architecture)

PREVIOUSLY:
Freitag Takes Container Architecture to New Heights

Emma Maersk: The Largest Cargo Ship in the World

IMAGES: Top, HO scale plastic shipping containers used on model railroad sets.  Bottom, a container ship passing under the Golden Gate Bridge. All photos by Telstar Logistics

Comments

[Craig Arnatt]

I seem to recall thousands upon thousands of these hulks lying in ship yards worldwide. There is a whole bunch here in Vancouver. However, as steel costs keeps rising, melting them down makes more economical sense -ha - better start buying some up and sitting on them as an investment. Call Los Angeles, they have lots. I wonder if that article was written by a steel corporation?

The benefit of using containers, even as prices increase, is that you can dramatically reduce the numbers of trees cut down to make a home. Reduce the footprint. Reuse the commodities that we have sitting in our backyards. If abandoned government or community groups should buy them up and use them or store for later as emergency housing. Years from now when we *really* can't cut more trees down, metal and cement boxes will be the future of building.

There is cement cloth that two kids from England invented which could revolutionize the housing trades. Build a mobile frame and the cloth sets up overnight. Move the frame over and do another days laying cement cloth overtop and so on. In the end you have a cement house, impermeable , storm proof, and last 50% longer than conventional stick frame house construction.

We are doing some things with containers at
zigloo.ca and zerocabin.com

[Tom Brandt]

It is hard to believe that there are not enough containers, but it is not hard to believe that the empty ones are at the wrong locations. Some smart logistics expert needs to crank up his or her super computer and create a system for managing the movement and assignment of empty containers.

One type of export products, agricultural products, use containers extensively. For example this location in Ellensburg, Washington, exports alfalfa I think. In the link the image shows about 100 containers in their yard. The containers mostly arrive empty, hauled by a truck, from the Seattle area, about 100 miles to the west. They are loaded with bales of alfalfa and hauled back to the Port of Seattle.

Will there be a bidding war for empty containers? I am sure that manufacturers of other less "soft" products for export would be willing to bid up the the availability of a container to export something of greater value than alfalfa or soy beans, or similar products.

With the tripling of truck fuel costs in the past couple of years, it will take some hard thinking and hard choices for making empty containers available when and where they are needed.

[kodiak]

Baltimore sun has the full text available online (for free) : http://www.baltimoresun.com/business/bal-containers0414,0,3148058.story

[Christopher Busta-Peck]

I find it hard to believe that there aren't enough shipping containers in the US - a look at eBay reveals about as many listed there as there were a few months ago. Though they do seem to be concentrated on the coasts, this seems to be more a reflection of population and shipping centers.

[Nina]

Looking at the picture, my first thought is:

Does anyone make Shipping Container building blocks for kids/toddlers (and of course, I think of none in particular).

I think it'd be a crying shame, if Miel Lappin were to come of age, without a complete boat/blocks set, in her nursery room.

Ooooh! Another thought: when she graduates from her crib, and to a bonafide bed... some kids have stock-car beds: you could make her one from a stack of shipping containers! She'll be the coolest kid in town!

[Discount Shipping]

I had no idea there was a shortage. There seems to be shortages on things you never thought would have that problem these days.

[Keith Schmidt]

Well 2008 was a bad year for shipping container prices but 2010 is probably the worst year in the history of the shipping container industry. Prices are up 200-300% since the Spring of 2010. You are even lucky if you can find shipping containers to ship with or buy. Utilization rates are upwards of 99% and the historic utilization averages is about 90%. The industry is a mess right now and I'm being told it will be like this for the next 12-24 months.

Sincerely,
Keith Schmidt
Giant Lock Box
www.giantlockbox.com