While the declining value of the U.S. dollar is good news for U.S. exports in general, the weaker dollar is making U.S. grain exports to Asia more expensive by drying up the supply of empty containers headed back to Asia. For several years, strong U.S. imports of just about everything from Asia meant that the thousands of containers that brought the goods to the United States were being returned empty. At that point, container companies were looking for anything they could find to fill those containers at a very attractive price. Rising bulk ocean freight rates meant that shipping U.S. grains back to Asia in containers became less expensive than in bulk carriers. Now, however, the weaker dollar means fewer U.S. imports and more U.S. exports, and the supply of empty containers headed for Asia has declined.
Jay O’Neil, senior agricultural economist of the International Grains Program at Kansas State University and USGC consultant, said container traffic from Asia to the United States is down 12 percent to 14 percent compared to last year.
“Now what we have is everyone hustling trying to find and compete for empty containers, and the rates have been going up,” he said, noting that the cost to ship a container from the United States to Asia is as high as $1,600-$1,700, up approximately 20 percent from a year ago.
The availability of containers to fill with grains and co-products in the Midwest is further reduced because more containers are being unloaded on the West Coast rather than being sent to Chicago or Kansas City.
“Container companies, due to increased domestic rail rates, have been unloading a greater number of containers on the West Coast and not in the interior United States,” O’Neil said.