Posted on Thu, Jun 03, 2010 @ 02:50 PM
The shortage of marine containers for export and domestic use has been a topic of concern for the last couple of years. This predated the economic collapse at the end of 2008, but it has been intensified by the recession. The drastic reduction of imports in early 2009 brought far fewer containers into the country. In addition, many steamship lines canceled lanes and their frequency of service and moved many ships to anchor, often loaded with empty containers that were no longer needed. These marine containers (20’, 40’ and 45’ containers) are a widely desired unit for international and domestic transport.
In the May 3rd article “Needed: More Boxes” from The Journal of Commerce, Peter Leach reports that in 2009 there were about 350,000 new containers manufactured, down from about 3 million in 2008. He goes on to report that the Federal Maritime Commission is concerned about container availability as it tries to increase their export levels now that the economy is showing signs of recovery. Many exporters are having difficulty obtaining containers, both standard and specialty models. Exporters need these units in order to ship many common goods including grains, perishable goods, lumber, paper, and scrap metal.
Michael Marley’s article “Where Have All the Containers Gone?” in the May issue of American Metal Market details the extreme difficulty many of the scrap metal dealers have been encountering. When breakbulk ocean freight rates skyrocketed in 2006, many scrap metal dealers shifted to containers, and eventually came to prefer this method of shipping. Today there is more competition for these limited units, and many dealers are having difficulty obtaining the containers they need and booking the shipping lines they desire.
The shortage is felt because the shipping lines are enjoying a surge in demand for exports from the USA. This continues to grow as the improvement in the economy that began in the second half of 2009 continues to grow. Lines are putting previously idle vessels back into service and restoring old lanes. With the increase in imports more containers are entering again, but not at a pace to fully satisfy demand. Domestic transporters have to contend with the Marine Department's decision to make empty containers first available for exports. Although there are some regions where container supply seems to be in surplus (namely New York and Memphis), in most major shipping points there is a supply shortage, particularly of the longer units.
ADS Logistics Co, LLC, Western Intermodal division supports export shipping as well as operates a domestic transportation service. We have been able to keep a steady supply of containers and equipment through our long-term relationships, cooperative repositioning of some equipment, private equipment, and constant attention. Transportation is a world of moving parts and the art is getting the parts to move where and when you need them.
Posted by Steve Klok, ADS Logistics.JR6DKH597WTN
Posted on Thu, Mar 18, 2010 @ 04:58 PM
“Just give me a rail car rate from Seattle to Chicago. I am pricing out some customers in that area,” someone will inquire.
“What railroads are they on, and what is the commodity?” we will ask.
“I don’t know exactly, but they are on the railroad and it is some kind of metal. I just need a basic rate,” comes the reply.
But therein lays the dilemma. In conventional rail car business, depending on which railroads are actually involved, and the specific commodity involved, the price of the move, and the potential to actually get cars for the move, can vary significantly. There are several types of rail carriers that might be participating in a move. There are linehaul carriers and switch carriers and sometimes you can have several of each involved in a rail route. Each has different ways of setting charges and sharing through rates.
Facilities that are on railroads might be on switch carriers who could connect to one or several railroads. This often enables different price options by comparing the pricing over the different railroads. They might be captive on a linehaul carrier, meaning that there won’t be options on getting into the facility. In cities like Chicago, where virtually all of the major railroads (and many small railroads) come together, there can be big difference in rates between facilities that are only a block apart, or if they are on different railroads.
In the example of finding a rail car rate from Seattle to Chicago, there are two main carriers coming out of Seattle, the UP and the BNSF but in Chicago there are those two as well as the CPR, CN, NS, CSXT, EJE, CSS, IHB, BOCT, ICE, and a few others, so the move could be anything from a single line linehaul on the UP or BNSF to a combination of one or more of the others.
The pricing models of different railroads can vary significantly and also vary by commodity and the amount of particular types of equipment they have available. In some cases the pricing differential can be $25 a ton, and sometimes even more. So, “Just give me a rate” won’t necessarily get someone what they need.
It always comes down to the details.
Article submitted by Steve Klok, Director- Distribution & Logistics