China first! Return of empty containers to China is profitable, and container crisis shakes up multi-country agricultural trade

It was reported on March 2 that foreign media said that the current gradual severe international container crisis is having a huge negative impact on global food trade.

The Bloomberg News website recently reported that the mountain of grain could not be shipped out because the carrier chose to return with empty containers.

Returning empty containers to China is highly profitable, and 3 out of 4 returns are empty containers.

The urgent global demand for containers means that Thai rice cannot be shipped out, while Canadian peas and Indian sugar have also suffered the same fate. Nowadays, shipping empty containers back to China can bring high profits. Even some US soybean carriers are having a headache to find containers and deliver soybeans to Asian buyers.

Steve Kranig, director of logistics for freight forwarding company IM-EX Global, said: “People in need cannot get the goods they need. I have a customer who usually sends 8 to 10 containers of rice from Thailand to Los Angeles every week.  But now, he can only transport 2 to 3 containers per week."

According to the report, the crux of the problem is that China, which has recovered quickly from the epidemic, has revived its export economy and paid a high premium for containers, which makes the return of empty containers far more profitable than returns of loaded goods.

Affected by the epidemic, containers have played an important role in many major international trades.

There are signs that soaring freight rates are pushing up the prices of some food categories.  Eric Weinberger, executive director of the American Soybean and Grain Professional Alliance, said that the price of sugar rose to the highest point in three years last month, and the delayed delivery of food-grade soybeans exported from the United States may mean that Asian consumers have to buy tofu and soy milk.  Pay a higher price.  The report pointed out that although it is not uncommon for containers to return empty after arriving at their destinations, carriers usually find ways to pull some goods and profit from two-way transportation.  However, data from the Hong Kong Fretos Cargo Company shows that the cost of exporting goods from China to the United States is now almost 10 times that of transporting goods from the United States to China, which makes carriers more willing to return to China with empty containers instead of choosing the United States.  Loading.  The head of the Los Angeles Port Office, Gene Seroka, said that in Los Angeles, the largest container cargo port in the United States, 3 out of 4 containers returned to Asia are empty. Normally, this ratio is 50%.  Jordan Atkins, vice president of Canada's WTC Group, said that the cargo terminal has shortened the container loading time from 3 days to 7 hours.  The container crisis shook multi-country agricultural trade, Atkins said: “In Vancouver, it is impossible for us to load a large number of goods into return containers in such a short period of time. In general, the transportation of beans is very difficult.” Canada is  The second soybean producer in the world.  Ravi Gupta, president of Shri Renuka Sugar, India's largest sugar company, said that India, the world's second-largest sugar producer, only exported 70,000 tons of sugar in January, only one-fifth of the same period last year.  According to the report, Vietnam, the world's largest producer of Robusta coffee beans, is also in export difficulties.  Li Xianxing, chairman of Duole 92 Import and Export Co., Ltd., the country's second largest exporter, said shipments in November and December fell by more than 20%.  Traders say that around the world, some buyers are waiting hard, while others have stopped buying altogether.

Kranig of IM-EX Global said: "This has been the case since December last year. If some of the beneficiary freight companies say that the shipping season from 2021 to 2022 will double the freight rate from previous years, I will not be surprised at all."  If this prediction comes true, once most people in North America and Europe are vaccinated, part of the high shipping costs may be passed on to them as they return to cafes, restaurants and office buildings.  The shortage of containers comes at a time when US exporters are trying to increase exports of products such as soybeans and grains to Asia.  China is purchasing American agricultural products to raise pigs, and the country is recovering from swine fever faster than most people expected.  But the situation is so severe that some buyers cancel their contracts and choose the most common bulk transportation method for feed products, or postpone purchases to avoid high shipping costs.  The report also stated that the American Scura Company is a trader with a century-old history and one of the largest containerized agricultural products carriers in the United States.  The company’s vice president, Doug Glennan, said: “We understand that some of the largest and most stable Asian soybean container buyers in the industry over the years have now chosen bulk carriers. Of course, like other companies, we have some cancellation orders.  Situation.” However, global food prices are unlikely to rise sharply.  Arnold Petit, executive director of the International Grain Council, said that only a small portion of grains and oilseeds are traded in containers, while the rest are transported in bulk.  Given the slowdown in economic development caused by the epidemic, it is unclear to what extent the increase in transportation costs will be passed on to consumers.  German Hapag-Lloyd told its customers last year that it would suspend overseas container transportation of North American agricultural products in order to transfer empty containers to Asia.  The German shipping company's global container logistics director Nico Heck said in November last year that after experiencing the largest decline in demand in history, the demand for 40-foot containers has grown the most.

Reports believe that the epidemic has also restricted the circulation of refrigerated containers.  In China, where a large number of containers are stacked in ports, workers must follow strict new coronavirus detection procedures and disinfect meat and seafood.  The labor shortage caused by the epidemic has slowed the speed of port operations and further aggravated the shortage of containers.  The strike in Argentina also stimulated demand for American agricultural products to supply Asia and increased competition for containers.  Glennan said: "This is a bit like a perfect storm. Asia’s demand for agricultural products is suppressed, and at the same time, the United States has a huge demand for consumer goods. Coupled with labor issues, all this is causing the shortages you see.  The real reason."