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Global food trade upended by a container crisis

15/02/2021 - François-Xavier Branthôme

USA: Outlook for several crops may improve
The economic outlook for several key California crops includes moderate improvements this year, while changes in the White House and Congress are poised to shake up agricultural policies related to COVID-19 response, climate change and trade: These points were shared during the 55th Colusa Farm Show Virtual Breakfast which was held as a webinar in early February.

Calling market prospects for processing tomatoes "generally positive," Roland Fumasi, an agricultural economist for Rabo AgriFinance, said he expects contract production in California to remain "very close" to last year, with prices above USD 80 a ton (ca. Euro 73/mT) (see also related articles below).

That would come despite the loss of food-service and institutional sales due to the pandemic”, he said, noting that pizza companies have been "booming because they're geared to home delivery." After coming out of a supply glut in late 2019, the tomato business was already in a positive position going into 2020 had it not been for impacts of the pandemic, he added.

On the positive side, the U.S. dollar is expected to stay on the "lower end of the higher range," which will bode well for exports, he pointed out.

Related to trade, one issue he said he's watching is a shortage of containers that's causing shipping slowdowns, much of it driven by port backlogs in China. "We've got containers that are literally dropping their cargo and skipping some of their normal scheduled ports, just to get back to China to try to relieve that backlog," he said, adding that this has led to increased shipping costs and problems getting containers.

Global food trade has been upended by a container crisis
According to Bloomberg, food is piling up in all the wrong places, thanks to carriers hauling empty shipping containers.

Global competition for the ribbed steel containers means that Thailand can’t ship its rice, Canada is stuck with peas and India can’t offload its mountain of sugar. Shipping empty boxes back to China has become so profitable that even some American soybean shippers are having to fight for containers to supply hungry Asian buyers.

The core issue is that China, which has recovered faster from Covid-19, has revived up its export economy and is paying huge premiums for containers, making it far more profitable to send them back empty than to refill them.

There are signs that the soaring freight rates are boosting the cost of some foods, such as sugar, tofu and soy milk. While it’s not entirely uncommon for containers to transit back empty after a voyage, carriers usually try to backfill them to profit from shipping rates in both directions. But the cost of carrying goods from China to the U.S. is almost 10 times higher than the opposite journey, prompting liners to favor empty boxes instead of loading them, Freightos (an online international freight marketplace) data showed.

At the port of Los Angeles, the U.S.’s biggest for container cargo, three in every four boxes going back to Asia are traveling empty compared with the normal 50% rate, said Executive Director Gene Seroka. In Vancouver, containers remain in the yards. 
The current situation is seriously impacting exports of Indian sugar, Vietnamese coffee and a lot of other strategic foodstuffs, to the point that some foodstuff buyers around the world are waiting while others have halted purchases altogether, traders say. “It’s been like that since December,” said Steve Kranig, director of logistics at IM-EX Global Inc. “You’re going to get not only a shortage of food but a shortage of everything. I would not be surprised to hear some beneficial cargo owners’ freight rates for 2021-2022 shipping season double from previous years.”

The container crunch comes just as American shippers are trying to boost exports of everything from soybeans to grain meals to Asia and other regions. The situation is so dire that some buyers are canceling contracts, opting for bulk shipping methods, the most common for feed products, or delaying purchases to avoid high freight costs.
Still, a major global spike in food costs is unlikely. Only a small percentage of grains and oilseeds is traded in containers, said Arnaud Petit, executive director of the International Grains Council in London, with the rest going bulk cargo. It’s also unclear how much of the rise in shipping costs companies will be able to pass on to consumers, given the economic slowdown caused by the coronavirus.

Suspending Shipments
Hapag-Lloyd AG last year told customers it was suspending overseas container shipments of North American agriculture products to reposition empty containers back to Asia. Nico Hecker, director of global container logistics at the German sea-freight company, said in November that the firm was experiencing the strongest increase in demand for 40-foot containers following one of the biggest decreases ever.
As containers became scarce in Asia, demand outpaced supply” along all container routes, said Judah Levine, research head at Freightos. Some carriers have cancelled sailings in coming weeks to catch up from delays, he added.

In addition, it should be mentioned that labor shortages due to the spread of the coronavirus are slowing operations at ports, and worsening the container shortage. Strikes in Argentina have also boosted demand for American agriculture products to supply Asia, increasing competition for boxes.

Some complementary data:
See also our weekly updated heading specifically dedicated to Exchange rates at:

Sources:, California Farm Bureau Federation,
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