Where have the $500 containers gone?

Containers are in short supply and the price of shipping of a container to Asia is steadily rising.  The common reason given for this is the weak dollar, which has allowed the US to export product that normally would not be competitive.

Do you honestly think that all those containers that ship all those Chinese goods that line the shelves of Wal Marts across America are being filled up with a similar amount of U.S. made consumer products to line the shelves of Chinese retail stores?

There is something else at play here. It has very little to do with the falling dollar. It is a long term sea change that will impact shipping costs and U.S. exports long into the future, even after the dollar regains it previous strength.

The change is containerized agriculture exports that used to go out in bulk. Demand for the product is far beyond capacity. We can sell every North Carolina field of soybeans, corn, wheat and other grain at a significant premium in the international market. We are on the way to doing that now.

Here is why. As of June 1, to ship a metric ton of soybeans to Asia by bulk costs $135 per metric ton. To ship that same metric ton to Asia by a container priced at $2,300 would be $88.46.  That is the smallest spread between the two in memory, and it is still very good. Containers will have to rise to about $3,500 with no increase in bulk shipping costs before the spread is lost.

Buyers in Asia have discovered that they are getting less expensive beans that are of higher quality and have lower foreign material. Several major buyers that normally purchase in panamax vessels, (52,000 mt per ship) are scrambling to purchase all their import needs through containers.

Unless there is a major collapse in the bulk container market, which seems very unlikely in the face to the current shortage of bulk shipping and the increased demand from China and soon perhaps India too, this market will continue. It will soak of every empty container it will find. The day of the $500 container to Asia may have gone the way of the buggy whip.

Market Development Cooperator Program (MDCP) Grants

Greg Sizemore, Director of the USDOC Charlotte Assistance Center reports several NC organizations, including NC DOC have benefited from the Market Development Cooperator Program (MDCP) in the past.  The MDCP is an annual competition that grants money to nonprofit organizations' projects to increase U.S. exports.  

USDOC's Management and Services will soon be announcing the FY2008 competition for MDCP awards.  

USDOC employees can share ideas with a potential MDCP applicant, or comment on a draft idea, only before the competition opens.  USDOC employee communication with potential applicants tends to result in stronger applications.  Once the competition period begins, what USDOC employees may say to applicants will be restricted.  Additional information about the MDCP Program can be found at http://trade.gov/mdcp or at http://export.gov/mdcp.

SUSTA London Wine Show

From a recent SUSTA Sponsored Trip report to a wine trade show in London:

What we learned: wine clubs in Europe are very interested in wines that no one else in their particular area have. Equally interested are restaurants, clubs, etc. A number of participants were amazed that states such as Texas and Virginia even have wineries, especially ones that produce wines that fit European tastes. These folks indicated that price was less of an issue whenever they could get things they wanted and others didn’t have. Accordingly, we believe there are possibilities for some of our North Carolina wineries that produce sufficient quantities of viniferous types of wines familiar to Europeans/Eastern Europeans and Russians.