FreightWaves SONAR: Heartland Shippers Feel 20-Foot-Box Squeeze

Written by Chris Gillis, FreightWaves
image description

Jim Allen/FreightWaves

The smallest of the standardized ocean containers in the global fleet remains ideal for dense, heavy agricultural goods, forest products and machinery shipments.

For many American agricultural product and machinery exporters, the standard 20-foot ocean container is the right size for their shipments. However, depending on where the cargo is located in the U.S., this equipment is becoming increasingly difficult to come by.

“There is a simple reason our members who ship both refrigerated and dry cargoes from all parts of the U.S. prefer 20-footers,” said Peter Friedmann, Executive Director of the Washington, D.C.-based Agriculture Transportation Coalition. “They can carry more cargo than the 40-footers.”

He explained that since agriculture and forest products, as well as machinery, are heavy, it is important for the exporters of these goods to minimize the weight of the actual container to increase content and remain in line with rail and truck gross weight limits.

“Usually, ag and forest products do not need the extra space afforded by a 40-foot or 45-foot container,” Friedmann said. “The 40-foot length adds the weight of an additional 20 feet of steel, plus more weight from required dunnage to hold the cargo in place. Thus, often the 40-footer actually can carry less cargo than a 20-footer in order to comply with weight restrictions imposed by railroads and the federal and state highway authorities.”

Many Midwest shippers find 20-foot boxes to be sparse and more expensive to obtain than 40-foot containers.

“The biggest problem with 20-footers is location,” Robert Sappio, CEO of Woodcliff Lake, N.J.-based SeaCube Container Leasing and former liner carrier executive, told American Shipper in a telephone interview. “The boxes don’t naturally go to these places.”

Ocean carriers prefer to keep their containers closer to the gateway seaports as much as possible by transloading their content to truck trailers for inland distribution. The majority of containers that are railed to the interior for handling are 40-foot-high cubes,” Sappio said.

Jim Allen/FreightWaves

“Intermodal service from the port area into the U.S. heartland is available, but volume is determined by the importers and where they want the cargo to end up,” said Andrew Hwang, manager of business development and international marketing at the Port of Oakland. “The vast majority of import 20-footers into Oakland tend to stay in California.”

California’s agricultural product exporters have no difficulty obtaining access to 20-foot containers, Hwang said.

“For the most part we are fortunate in that most of our shipments are from coastal ports directly,” said Hayden Swofford, a longtime advisory board member of the Agriculture Transportation Coalition and Executive Director of the Pacific Northwest Asia Shippers Association in Washington State. “The result is we have not had a big issue with equipment.”

Those empty 20-foot boxes that are shipped to the Midwest by rail must be sourced by shippers from large rail hubs, such as Chicago and Kansas City, Mo., and then often transported hundreds of miles by truck to where they are loaded. The shipper is then responsible for trucking the loaded container back to a rail hub for the return trip to the outbound seaport.

“Shipping companies want to provide these containers to the U.S. heartland, but they obviously don’t want to move them for free,” Sappio said.

Steven Blust, Executive Director of the Washington, D.C.-based Institute of International Container Lessors, said the size of the world’s 20-foot container fleet has remained relatively unchanged in recent years. In 2019, the world container fleet consisted of 44 million TEUs. While that number includes all sizes of containers, Blust noted an estimated third of those are 20-foot boxes. “There hasn’t been a drop-off of 20-footers globally,” he said.

However, in recent weeks, ocean container carriers have announced several hundred canceled sailings over the next several months due to the diminished international freight traffic caused by the pandemic, further straining 20-foot container availability in the heartland, as well as driving up freight rates for this equipment.

“If you’re relying on these containers for your outbound shipping, you can definitely see the storm clouds on the horizon,” Mike Steenhoek, Executive Director of the Ankeny, Iowa-based Soy Transportation Coalition, told American Shipper. “With the ongoing cancellation of sailings, it’s going to become next to impossible to get these containers.”

The standard 20-foot container has been a staple of the ocean shipping industry since the inception of containerization in the late 1950s when it was introduced by Malcom McLean’s ocean carrier Sea-Land Service. Today, however, the 40-foot high-cube container is the one most predominantly used by shippers in the East-West trades.

FreightWaves SONAR offers the most essential rail and intermodal data available, with daily updates on rail and intermodal pricing and volumes. Additionally, compare rail market trends against other modes of transportation gain a comprehensive view of logistics markets. Users can react faster than ever to changing market conditions, giving them an advantage never before seen in freight. To learn more and schedule your personal free trial, click here.

Norfolk Southern photo
Categories: Freight Forecasting, Intermodal, News Tags: ,