Food is piling up in all the wrong places

[fusion_builder_container type=”flex” hundred_percent=”no” hundred_percent_height=”no” min_height=”” hundred_percent_height_scroll=”no” align_content=”stretch” flex_align_items=”flex-start” flex_justify_content=”flex-start” flex_column_spacing=”” hundred_percent_height_center_content=”yes” equal_height_columns=”no” container_tag=”div” menu_anchor=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” status=”published” publish_date=”” class=”” id=”” link_color=”” link_hover_color=”” border_sizes=”” border_sizes_top=”” border_sizes_right=”” border_sizes_bottom=”” border_sizes_left=”” border_color=”” border_style=”solid” spacing_medium=”” margin_top_medium=”” margin_bottom_medium=”” spacing_small=”” margin_top_small=”” margin_bottom_small=”” margin_top=”” margin_bottom=”” padding_dimensions_medium=”” padding_top_medium=”” padding_right_medium=”” padding_bottom_medium=”” padding_left_medium=”” padding_dimensions_small=”” padding_top_small=”” padding_right_small=”” padding_bottom_small=”” padding_left_small=”” padding_top=”” padding_right=”” padding_bottom=”” padding_left=”” box_shadow=”no” box_shadow_vertical=”” box_shadow_horizontal=”” box_shadow_blur=”0″ box_shadow_spread=”0″ box_shadow_color=”” box_shadow_style=”” z_index=”” overflow=”” gradient_start_color=”” gradient_end_color=”” gradient_start_position=”0″ gradient_end_position=”100″ gradient_type=”linear” radial_direction=”center center” linear_angle=”180″ background_color=”” background_image=”” background_position=”center center” background_repeat=”no-repeat” fade=”no” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ background_blend_mode=”none” video_mp4=”” video_webm=”” video_ogv=”” video_url=”” video_aspect_ratio=”16:9″ video_loop=”yes” video_mute=”yes” video_preview_image=”” absolute=”off” absolute_devices=”small,medium,large” sticky=”off” sticky_devices=”small-visibility,medium-visibility,large-visibility” sticky_background_color=”” sticky_height=”” sticky_offset=”” sticky_transition_offset=”0″ scroll_offset=”0″ animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” filter_hue=”0″ filter_saturation=”100″ filter_brightness=”100″ filter_contrast=”100″ filter_invert=”0″ filter_sepia=”0″ filter_opacity=”100″ filter_blur=”0″ filter_hue_hover=”0″ filter_saturation_hover=”100″ filter_brightness_hover=”100″ filter_contrast_hover=”100″ filter_invert_hover=”0″ filter_sepia_hover=”0″ filter_opacity_hover=”100″ filter_blur_hover=”0″][fusion_builder_row][fusion_builder_column type=”1_1″ layout=”1_1″ align_self=”auto” content_layout=”column” align_content=”flex-start” content_wrap=”wrap” spacing=”” center_content=”no” link=”” target=”_self” min_height=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” class=”” id=”” type_medium=”” type_small=”” order_medium=”0″ order_small=”0″ dimension_spacing_medium=”” dimension_spacing_small=”” dimension_spacing=”” dimension_margin_medium=”” dimension_margin_small=”” margin_top=”” margin_bottom=”” padding_medium=”” padding_small=”” padding_top=”” padding_right=”” padding_bottom=”” padding_left=”” hover_type=”none” border_sizes=”” border_color=”” border_style=”solid” border_radius=”” box_shadow=”no” dimension_box_shadow=”” box_shadow_blur=”0″ box_shadow_spread=”0″ box_shadow_color=”” box_shadow_style=”” background_type=”single” gradient_start_color=”” gradient_end_color=”” gradient_start_position=”0″ gradient_end_position=”100″ gradient_type=”linear” radial_direction=”center center” linear_angle=”180″ background_color=”” background_image=”” background_image_id=”” background_position=”left top” background_repeat=”no-repeat” background_blend_mode=”none” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” filter_type=”regular” filter_hue=”0″ filter_saturation=”100″ filter_brightness=”100″ filter_contrast=”100″ filter_invert=”0″ filter_sepia=”0″ filter_opacity=”100″ filter_blur=”0″ filter_hue_hover=”0″ filter_saturation_hover=”100″ filter_brightness_hover=”100″ filter_contrast_hover=”100″ filter_invert_hover=”0″ filter_sepia_hover=”0″ filter_opacity_hover=”100″ filter_blur_hover=”0″ last=”true” border_position=”all” first=”true”][fusion_text columns=”” column_min_width=”” column_spacing=”” rule_style=”default” rule_size=”” rule_color=”” content_alignment_medium=”” content_alignment_small=”” content_alignment=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” class=”” id=”” font_size=”” fusion_font_family_text_font=”” fusion_font_variant_text_font=”” line_height=”” letter_spacing=”” text_color=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]

Food is piling up in all the wrong places, due to struggles facing ships hauling empty shipping containers.

Global competition for the ribbed steel containers means that Thailand can’t ship its rice, Canada is stuck with peas and India can’t offload its mountain of sugar. Shipping empty boxes back to China has become so profitable that even some American soybean shippers are having to fight for containers to supply hungry Asian buyers.

People aren’t getting their goods where they need them, according to freight forwarders that handle cargoes including rice, bananas and dumplings from Asia to the U.S. Some exporters ship normally 8 to 10 containers of rice every week from Thailand to Los Angeles. But they can only ship 2 to 3 containers a week right now.

The core issue is that China, which has recovered faster from Covid-19, has revved up its export economy and is paying huge premiums for containers, making it far more profitable to send them back empty than to refill them.

There are signs that the soaring freight rates are boosting the cost of some foods. White sugar prices surged to a three-year high last month, and delays in food-grade soybean shipments from the U.S. could mean higher tofu and soy milk costs for consumers in Asia.

Food Containers, hard to find empty equipment

While it’s not entirely uncommon for containers to transit back empty after a voyage, carriers usually try to backfill them to profit from shipping rates in both directions. But the cost of carrying goods from China to the U.S. is almost 10 times higher than the opposite journey, prompting liners to favor empty boxes instead of loading them

At the port of Los Angeles, the U.S.’s biggest for container cargo, three in every four boxes going back to Asia are traveling empty compared with the normal 50% rate. In Vancouver, containers remain in the yards. Terminals have shortened the time to transport the stuffed boxes onto ships from three days to as little as seven hours.

It’s not possible to get the amount of volume in Vancouver to return containers in those tight windows. Pulses, such as peas and lentils, in general are struggling getting on the ships. Canada is the world’s second-largest producer of pulses.

India, the world’s second-largest sugar producer, exported only 70,000 metric tons in January, less than a fifth of the volume shipped a year earlier.

Vietnam, the largest producer of the robusta coffee beans used to make instant drinks and espresso, is also struggling to export. Shipments dropped more than 20% in November and December.

Warehouses in Vietnam are full due to seasonal selling and low exports following the shortage of containers. Around the world, some foodstuff buyers are waiting while others have halted purchases altogether.

Shortage of Everything

It’s been like that since December. We are going to get not only a shortage of food but a shortage of everything. It would not be a surprise to hear from some beneficial cargo owners’ freight rates for 2021-2022 shipping season double from previous years

If that prediction bears out, once the bulk of North Americans and Europeans are vaccinated, some of those high freight rates could be passed on to them as they return to cafes, restaurants and office towers.

The container crunch comes just as American shippers are trying to boost exports of everything from soybeans to grain meals to Asia. China is scooping up American crops to feed a hog herd that’s recovering from a deadly pig disease faster than most expected. The situation is so dire that some buyers are canceling contracts, opting for bulk shipping methods, the most common for feed products, or delaying purchases to avoid high freight costs.

Some of the industry’s largest and most consistent buyers of soybean containers in Asia over the years are now electing to buy bulk vessel supplies. And certainly there will be booking cancellations.

Still, a major global spike in food costs is unlikely. Only a small percentage of grains and oilseeds is traded in containers, with the rest going bulk cargo. It’s also unclear how much of the rise in shipping costs companies will be able to pass on to consumers, given the economic slowdown caused by the coronavirus.

Shippinglines suspending Container Shipments

Hapag-Lloyd AG last year told customers it was suspending overseas container shipments of North American agriculture products to reposition empty containers back to Asia. The firm has been experiencing the strongest increase in demand for 40-foot containers following one of the biggest decreases ever.

As containers became scarce in Asia, demand outpaced supply, along all container routes. Some carriers have canceled sailings in coming weeks to catch up from delays.

The pandemic has also upended flows of refrigerated containers. In China, boxes are piling up at ports as workers have to comply with strict Covid-testing procedures as well as disinfection of meat and seafood products after frozen-food imports were blamed for the spread of the virus. There are so many cold containers in Dalian that the port is running out of power plugs to keep them on.

As imports are being held up, wholesale pork prices in China, the world’s top consumer, jumped to the highest since September. That’s prompted the government to boost sales of state pork reserves to meet booming demand ahead of the Lunar New Year holiday.

Labor shortages due to the spread of the coronavirus are slowing operations at ports, and worsening the container shortage. Strikes in Argentina have also boosted demand for American agriculture products to supply Asia, increasing competition for boxes.

It’s a bit of a perfect storm. There is high demand in Asia for agriculture products and there is at the same time a pretty substantial consumer goods demand in the U.S. When you add to that some of the labor issues, that’s what really crated the scarcity we are seeing.

Copyright gcaptain

[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]