U.S. Containerized Grain and Oilseed Exports: Industry Survey

Abstract

Containerization has evolved from an industry serving niche markets to an industry creating niche market opportunities. Although the grain and oilseed industry is dominated by bulky, homogenized product marketing that is heavily reliant on economies of scale in delivering competitively priced commodities, technological advances, foreign market privatization, and declining global market transaction costs have supported diversification of this industry in niche markets such as small-volume containerized products. The findings of this research suggest that an established and growing U.S. shipper population is active in marketing containerized grains and oilseed products. A survey of shippers suggests that premiums for containerized grain and oilseed products are $5 per hundredweight, compared with premiums for the local bulk counterpart market. The net return to shippers is opaque as business practices and market fundamentals influence the costs associated with delivering the product to a customer overseas versus a local grain terminal or processor. Assuming that market activity is positively correlated to profitability, the grain and oilseed container shippers appear to be achieving acceptable levels of profit. Shippers report that container exports increased annually between 2000 and 2002, and they are projecting it will increase another 20% by 2005. Although many factors affect industry ability to realize this growth, shippers deem ocean freight rates as most crucial. Ocean liner routes and services, distance to container terminal, and foreign buyer information are also rated as having above-average importance.