USDA: Containerized grain volumes slip

With plunging bulk shipping rates, grain shipments by container to Asia began to show some weakness late last year, according to the U.S. Department of Agriculture.

      Although statistics are delayed several months, the Jan. 1 edition of the USDA's weekly grain transportation report said September 2008 grain shipments to Asia were down 13 percent from September 2007 but still 44 percent above the three-year average.

      When discussing soybean shipments in containers, it is kind of a tale of two commodities, said Mike Steenhoek, executive director of the Soy Transportation Coalition.

      Food grade, non-genetically modified soybeans that are used to make tofu in Japan, will always use containers, he said. But use of containers to move commodity, genetically modified soybeans used primarily for animal feed has been more variable.

      As dry bulk freight rates climbed in recent years, shippers of commodity soybeans decided to utilize containers, Steenhoek said. An added bonus was the ability to better serve customers who desire soybeans from a particular location and in smaller quantities, but the main driver was price.

      In the second half of 2008 as bulk rates plummeted, many shippers of commodity soybeans have decided to return to the traditional bulk channels, he said.

      Bulk rates for grain to Asian countries in November were down 76.6 percent from Gulf of Mexico ports and down 79.9 percent from ports in the Pacific Northwest from what they were in November 2007, the USDA said.

      But container rates tell a different story. Third quarter 2008 container rates from the United States to Japan were down 7 percent for grain, but were up 90 percent for soybeans, the USDA said in its weekly report. But it cautioned these were publicly filed tariff rates, not those negotiated in a confidential service contract.

     Most soybean shippers who ship food grade, non-GMO soybeans will seek long term contracts with steamship companies for containers,  Steenhoek said. Shippers of commodity grade soybeans tend to choose flexibility and buy transport in the spot market either for container or on bulk ships.

      We'll see what the entire year numbers reveal, Steenhoek said.    Despite the economic downturn in late 2008, soybean exports were very high throughout the first six to eight months of the year, so 2008 may exceed 2007.

      Since containers a few years ago were predominately used for transporting food grade, non-GMO soybeans (a small percentage of overall soybean exports), it's not surprising that we are 44 percent above the three-year average, he said.

Source: American Shipper