Box shortage squeezes exporters

Box shortage squeezes exporters    Sharply reduced production of shipping containers has contributed to the difficulty U.S. exporters are having in obtaining equipment to move their goods.
   'Most of the container manufacturing plants in China pretty much shut down and closed all their production lines, and the carriers are having a real problem in getting these people to ratchet those production lines back up again,' said Brian Conrad, executive administrator of the Westbound Transpacific Stabilization Agreement.
   In remarks to the annual conference of the Agriculture Transportation Coalition (AgTC) in San Francisco last week, Conrad said, 'there is almost no new equipment available.'
   Geoffrey Giovanetti, managing director of the Wine and Spirits Shippers Association, cited figures from the magazine Containerisation International showing only 350,000 TEUs produced in 2009 compared to 3.25 million TEUs in 2008 and 4.25 million in 2007. Carriers added ships with about 1.4 million TEUs capacity last year, according to the information service AXS-Alphaliner.
   Conrad said that in addition to a worldwide equipment shortage, shippers of U.S. agricultural products are also being affected by high demand for equipment in the transpacific eastbound, Asia-to-Europe and intra-Asia trades, as well as the high cost of repositioning containers within the United States to rural areas where agricultural exports originate.
   The 10 container shipping companies that are members of the WTSA 'have pretty much decided ' there will be no GRIs (general rate increases), no further increases in rates until at least September or October,' Conrad said.
   'Shippers have said they can't keep taking these monthly GRIs. Many shippers have said we sell our product on a quarterly basis, we need a little bit more lead time for you to tell us about increases, so we can plan our costing accordingly,' he said.
   Conrad also said carriers have decided to take 'a more traditional commodity-based approach in looking at these increases' where the differences between commodities such as wastepaper, cotton and chemicals would be recognized.
   A WTSA revenue index set at 100 in January 2008 climbed to a high of 117.7 in October 2008 before falling to a recent low 92.01 in June of 2009 and climbing to 111.65 in March.
   'The rates have gone up somewhat over the last six months, but they are not back to the levels that they were in 2008,' Conrad said.
   William Rooney, president of Hanjin Shipping America, told the group that transpacific export rates are 'stable' and should remain that way in the third quarter, but may go up later in the year.
   He told members of the AgTC that transpacific revenue per load inbound are about 50 percent higher than outbound revenue per load.
   'To be very frank, that drives a lot of decisions and a lot of those decisions impact people in this room and will continue to impact people in this room,' Rooney said.
   WTSA announced plans to form a 'shipper-carrier advisory board' where about 15 shippers, including some agriculture shippers, will meet to discuss general industry issues.
   'It is not going to be a board that will talk about what is the rate for wastepaper and is it acceptable to raise rates out of Houston for resin — it will talk about some of the broader issues,' Conrad said.
   WTSA is also working with the U.S. Department of Agriculture on a pilot project related to the equipment shortages and participating in the Federal Maritime Commission's investigation of capacity issues.
   FMC Commissioner Rebecca Dye attended the AgTC meeting, and met with shipper representatives there.
   Conrad and other carrier representatives were conciliatory during the AgTC meeting, where shippers complained about the inability to ship their products, rate increase and poor service.
   But Conrad insisted that while the WTSA shares market information, and develops trade-wide standards, 'we do not jointly set or enforce rates in the U.S/Asian market' nor 'jointly restrict or otherwise manage capacity. It is illegal and we don't do it.'
   He said he was 'shocked' by one presentation at the meeting about poor customer service.
   'Customer service should be better than that, but to blame the agreement and to blame antitrust immunity for that sort of thing is really not the right way to go,' he said. 'That is an issue that you need to talk about with your individual carriers.'
   And reacting to e-mails from carriers saying that customers cargo might be considered 'non-loadable' unless they agreed to 'voluntary' rate increases, he said 'one of the most important things that we discuss in WTSA and that we tell carriers at all times is 'honor your service contracts.' '
   At the meeting, the AgTC released its annual survey of agriculture shippers and forwarders that ranks container carrier performance, awarding top place to APL among the 19 liner companies it rates. Results of the survey can be found here.
   The group said it initiated the survey in 2007 in order to address significant shortcomings on the part of some carriers in the area of documentation, specifically, timely and accurate bills of lading. ' Chris Dupin