Editor’s Note: This is the third in a U.S. Grains Council (USGC) series exploring modes of transportation – including railways and the inland waterways system – within the U.S. grains supply chain, which provides a reliable supply of U.S. coarse grains, co-products and ethanol to the world’s market.
The grain supply chain in the United States can sometimes feel like a Dr. Seuss suite of options – could you, would you on a boat? Could you on a train? In a box? Fox, socks and analogies aside, the most intermodal of shipping options is containerized shipping, which can deliver grain by truck, by train or by sea to end-users around the world.
“The combination of grain transportation options available in the United States contributes to the reliability of the U.S. grain supply system,” said Ryan LeGrand, USGC president and chief executive officer. “From the railway network to the inland waterway system to containerized shipping, the various modes of grain movement are key to continued growth in U.S. exports of coarse grains and co-products.”
Containerized shipping allows for a direct farm-to-table supply chain for coarse grains like corn, barley or sorghum or co-products like dried distiller’s grains with solubles (DDGS). Containers can be loaded directly at the point of origination, inspected and checked at the border and arrive with minimal additional handling at the destination point – whether that is the other side of the country or across the ocean.
“Integrated export traders with our own trucking and grain handling infrastructure are able to originate U.S. grains at the farm or country elevator level,” said Adel Yusupov, commodities trader with International Feed. “Our direct relationships with global shippers allow us to move U.S. grain directly to customers’ feed mills all over the globe. That is the beauty of containerized shipping.”
In addition to preserving quality by reducing the number of times the grain is handled, containerized shipping also allows for just-in-time procurement. Customers can schedule a certain volume of grain to arrive on a specific time schedule. For example, Yusupov said some customers place orders of 500 metric tons every two weeks, which also reduces storage costs on the receiving side and potential loss due to spoilage.
While containerized shipping has only been part of the grain supply chain for the last two decades, this segment is accounting for a growing portion of grain shipments, particularly for specialty feed for food ingredients.
“Moving coarse grains and co-products through containers provides additional opportunities for U.S. farmers and agribusinesses to export to international markets,” said Reece Cannady, USGC manager of global trade. “Industry investments have increased the visibility and viability of containerized shipping, adding strength to the overall reliability and competitiveness of the U.S. grain export system.”
Southeast Asia is a prime market where grain importers are increasingly interested in containerized cargo, due to relatively inexpensive U.S.-to-Asia backhaul freight and growing demand for meat and feed. Other markets in the Middle East and Africa are also seeing growth in containerized shipping as those economies strengthen.
Due to heavy container traffic between the United States and Asia, 2020 has been a rollercoaster for containerized shipping following the outbreak of COVID-19 in January. Cancellations became a daily norm, with more than 80 vessel service cancellations during the Chinese New Year/coronavirus quarantine in China. As a result of a lack of empty containers and lack of vessel space to back-haul those that were available to the United States, shortages occurred at in-land locations in Columbus, Ohio, Chicago, Minneapolis and Kansas City.
Throughout the following months, logistics remained difficult and stressful for the container market. In addition to supply disruptions, some reductions in demand were eventually seen across the region due to lack of tourism and retail consumption caused by strict government-enforced movement control orders.
Since that time, however, containerized grain shipments have started to slowly recover, signaling the relevance of this shipping segment to the supply and demand sides of the market.
“It was encouraging to see the U.S. supply chain in work mode throughout the lockdown as elevators, transportation and port operations stayed open and asking for business,” Yusupov said. “The main logistics concerns were renewed risk of blank vessel sailings and inland container availability, but those concerns are mostly a thing of the past at this point. We are seeing positive changes already and are excited as we look forward.”
About The U.S. Grains Council
The U.S. Grains Council develops export markets for U.S. barley, corn, sorghum and related products including distiller’s dried grains with solubles (DDGS) and ethanol. With full-time presence in 28 locations, the Council operates programs in more than 50 countries and the European Union. The Council believes exports are vital to global economic development and to U.S. agriculture’s profitability. Detailed information about the Council and its programs is online at www.grains.org.