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Soybean growers think inside the (shipping) box to reach new markets

11/5/2018 3:57:45 PM

Dive Brief:

  • An anticipated 35-year record bumper crop of U.S. soybeans and loss of sales to China has growers looking at using containers rather than bulk carriers to reach new international markets, according to an Illinois Soybean Association press release.
  • China, the world's largest soybean market, tacked on a 25% tax on U.S. soybeans in response to tariffs on Chinese imports to the U.S.
  • If it works, exporting agricultural commodities in containers could help reduce empty container shipments, a $20 billion problem for the shipping industry. 

Dive Insight:

Shipping soybeans via containers could allow soybean farmers to reach new markets, the Illinois Soybean Association said. In Illinois, the largest soybean producing state, farmers are expecting a bountiful fall harvest at the same time demand from China is falling.

"This trade shift is occurring against the backdrop of a fall harvest that experts forecast to be record-setting in terms of production," said Eric Woodie, Illinois Soybean Association (ISA) Trade Analyst in the release. "We see a major opportunity in containerized shipping of soybeans, which will open the door for American farmers to access new Asia-Pacific and European markets."

The Chicago area is particularly well suited to this market because it's a distribution hub for major retailers and other shippers that import products in containers. Intermodal facilities in the region connect inland grain producers with overseas buyers. Potential new grain markets include Taiwan, Indonesia and Thailand as well major apparel production centers such as Bangladesh and Sri Lanka, Woodie told Supply Chain Dive.

"Those are points where the container lines want containers to go, there's a lot of manufacturing for clothes, and different items that inevitably end up making their way back to the U.S. as the front haul and the beans can be the backhaul," he said. "Quite often those empty containers leave Chicago carrying nothing but air."

Shipping soybeans in container-size quantities could appeal to purchasers who want smaller quantities or require faster order fulfillment for a better time to market and product quality. Most of the smaller receivers don't have storage available for bulk quantities and can put a container load immediately into the production process.

Customers may want a particular strain of soybean or non-GMO products that aren't available in bulk quantities. Typical turnaround time for a bulk vessel to Asia is three to four months, compared to container delivery to Asia in three to four weeks, according to the United States Soybean Export Council.

Container shipping may also help small producers, cooperatives and suppliers who can't fill orders large enough to fill a bulk vessel. Containers can be loaded with soybeans using conveyor belts or augers that most farmers already own.

In 2013, agricultural giant Archer Daniels Midland opened a 275-acre rail yard at its facility in Decatur, Illinois, that can handle more than 50,000 containers a year.


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