Containerized grain transportation
February 01, 2008
by World Grain Staff
According to a report released in January by the U.S. Department of Agriculture’s Agricultural Marketing Service, monthly shipments of containerized grain from the United States (U.S.) to Asia continue to trend upward. It showed that more than 48,000 20-foot grain containers were shipped in November 2007, up 98% from the previous November and 164% above the three-year average.
The advantages to shipping grain, oilseeds and pulse crops in sealed boxes as opposed to bulk shipments are becoming evident to producers, particularly those attempting to develop a niche market for their product.
But the most compelling reason for wanting to move grain in containers remains the same. Farmers watch tens of thousands of empty containers moving past their fenceline as priority freight destined to Asia and India and they see a missed opportunity.
Before that opportunity can be capitalized upon, the owners of these containers will have to be convinced. Most shipping companies want their boxes to move quickly, delivering high value consumer goods to major centers on the East Coast of the U.S. and returning to the manufacturing plant to be refilled with as little uncertainty and delay as possible.
In the Great Plains region of the U.S., efforts are being made to establish transload centers capable of loading grain into containers and sending it to West Coast ports such as Portland and Tacoma. One of the major proponents of the move to containerized grain is North Dakota Governor John Hoeven. Although progress is slow, a major industrial complex in Bismarck, North Dakota, U.S. is now up and running, and the possibility of transloading grain at the new Northern Plains Commerce Center is being tested.
Gloria Davia, spokesperson for the City of Bismarck, told World Grain the center offers a 4 1/2-acre fenced intermodal yard and equipment for handling containers.
"While we do have some agricultural processors that we’re working with, we’ve got others that we thought we would be working with that will probably continue with the carload mode of transportation," she said. "What’s happening here in the U.S. is we’ve got steamship lines that are eliminating a lot of container yards in the Midwest, and they’re needing to get a quick turn on those containers. To bring them into some of these remote areas like North Dakota, South Dakota and Montana that don’t have a lot of imports, they can’t get them in and out quick enough."
She added, "It’s a lot bigger picture than most of our local shippers see. The old hub-and-spoke theory that used to work is going away. It’s going to be major intermodal terminals with 200,000-to 300,000-container throughput."
THE CANADIAN WEST A major development for shippers sending containers through Canada’s West Coast was the opening of the Port of Prince Rupert’s first container terminal in the fall of 2007. The terminal offers shippers a shorter, faster route to Asia and fits well with Canadian National (CN) Railway’s grain and grain products container loading facility opened last year north of Edmonton, Alberta, Canada.
As well, CN plans to open a new grain distribution center in the Chicago, Illinois, U.S. area this year to deliver grain through Canadian ports.
These developments and the growing diversification of global markets has also encouraged the Canadian Wheat Board (CWB) to plan to double the number grain containers this crop year after having quadrupled the number of grain-filled containers handled last year to 45,000.
Mark Dyck, manager of rail logistics for the CWB, said record-high ocean shipping rates for bulk commodities are now making it more economical to ship grain to select customers by container.
BRAZIL As with most South American countries, Brazil’s road and rail infrastructure needs upgrading. Nelson Carlini, general manager-Brazil for Marseilles France-based CMA CGM, the world’s third-largest container shipping company, told the Brazilian-American Chamber of Commerce in August that inadequate port facilities and railroads are a major challenge for Latin America.
In particular, he expressed concern about ports in southeastern and southern Brazil that need to be expanded and upgraded over the next three to four years to handle increasing trade and larger ships.
"It is a major challenge," Carlini said. "We need better ports, land infrastructure, areas of ports to receive trucks, and railroads need to improve. Too many things have to be done in a short time and that might create problems."
Most of Brazil’s agricultural exports still move by truck and are loaded as bulk cargo, with the lion’s share moving through Santos, which is the largest port in South America with containers moving through the modern, nearby terminal at Conceicaozinho. Carlini told World Grain that while Brazil moves a lot of poultry and meat in containers, the use of containers for agricultural crops, except for coffee, has yet to catch on.
Being the largest coffee producer in the world — and the largest exporter at 29 million 60-kilogram bags of coffee in the 2006-07 export year — the amount of containerized coffee is significant. The coffee is often loaded into containers lined with plastic bags, "one bag per container, or sometimes in the smaller 50-kilo-to-60-kilo bags," Carlini said.
Most product is moved to the port by truck. "We lack railroads," Carlini said. "Our railroads have been built along the coast and not to the interior. Our roads are not good and we have a little barging, mainly in the Amazon area."
The largest ports are the southern ports of Santos, Rio de Janeiro, Rio Grande and Tajai.
But Carlini believes the future of containerization for agricultural products in Brazil is good. "It’s already 100% for coffee; sugar is almost 100%," said Carlini, noting that small- and mediumsized producers are turning increasingly to containers, particularly with today’s high rates for bulk shipping.
Smaller companies and producers are looking for containers, he said, "because of the quantities, the flexibility and the fact that the integrity of the cargo is guaranteed."
AUSTRALIA The move to containerized grain has accelerated in Australia with the record increases in ocean bulk shipping rates due to the strong worldwide demand for coal, iron ore and fertilizer. A source at the Australian Railroad Group also told World Grain that shippers are choosing containers to avoid restrictions imposed by the Australian Wheat Board with export containers moving through the Port of Fremantle.
"Easing of container volumes will occur when bulk shipping rates ease and/ or if export licensing conditions for bulk grain are eased," he said. "However, it is likely that some markets will develop that prefer containerized grain. If this occurs, container volumes may not revert to the historical levels but remain somewhat higher." WG
Based in Vancouver, British Columbia, Canada, Leo Quigley writes for a variety of national and international publications specializing in agriculture and transportation. He can be reached at Quigley@dccnet.com.