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How Containerization Supercharged Global Trade

Containers

How Containerization Supercharged Global Trade

The Illinois Soybean Association created a series of infographics demonstrating the ways in which containers are used efficiently and create opportunities for many industries. Many aren’t aware of the numerous ways in which shipping containers made transportation easier, thereby supercharging global trade.

The first container shipped from Newark to Houston in April 1956. This set off an era of tremendous efficiency in global shipping of goods and created a standardized unit that could be carried by any truck, train or container ship. Containers today carry anything from bananas to electronics to soybeans. Some ships can carry an astonishing 11,000 containers that are 20ft long.

Currently, container shipping underpins that global economy is moving $4 trillion of goods every year. Read more at https://www.ilsoy.org/.


Soybeans Containerization

How Soybeans Can Save Billions in Container Repositioning

Containers are essential to the shipping and trade industry, making shipping more efficient and often faster. However, many containers are left to sit idle due to the trade imbalance in the U.S. Costing the industry billions of dollars a year, vacant containers sit empty and cause congestion at ports.

However, container repositioning offers a solution to the wasted money and time many face. By repositioning containers to back-haul with U.S. soybeans, it works to help alleviate a huge problem in global trade.

This introduces profitability when product flows back and forth and offering opportunity to US farmers. In fact, many Asian markets have shown a growing preference for containerized shipping of specific goods, such as soybeans due to the preservation it offers to fresh goods. By working to reposition containers, it offers savings as well as opportunity for U.S. farmers. Read more at https://www.ilsoy.org/.


BREAKING BAD TRADE: FENTANYL FROM CHINA

The Real Poison Pill in U.S.-China Trade

Following a historic dinner between President Trump and President Xi last December in Argentina on the margins of the G20 Summit, many of us awaited news on tariffs. We were surprised when, as part of a trade announcement, President Trump hailed a commitment from China to step up its regulatory oversight of fentanyl, the opioid that the Centers for Disease Control says has caused a “third wave” of drug-related overdose deaths in the United States.

It seems the seedy underbelly of e-commerce involves a steady stream of online purchases of deadly variants of the drug fentanyl, made in China and shipped to American doorsteps through the U.S. postal service.

Deadly Parcels from China

Fatal drug overdoses have doubled over the last decade, rising from 36,010 in 2007 to 70,237 in 2017. Synthetic opioids other than methadone – mainly fentanyl – now account for 40 percent of all drug overdose deaths and 60 percent of opioid overdose deaths.

China is the primary source of illicit fentanyl, fentanyl analogues, and fentanyl precursor chemicals in the United States. According to U.S. Customs and Border Protection, almost 80 percent of fentanyl seized in 2017 was interdicted at U.S. Postal Service and express consignment carrier facilities, having been shipped in small quantities from China.

Fentanyl precursors are also shipped from China to Mexico, and to a lesser degree Canada, before being synthesized, often mixed with heroin or cocaine, repackaged, and then trafficked over U.S. land borders in the southwest.

Fentanyl third wave of overdoses

STOP

Last March, the White House stepped up its campaign against opioid abuse, seeking to address factors driving both demand and supply. The Initiative to Stop Opioid Abuse (referred to as STOP) includes education programs, measures to curb over-prescription, expanded access to treatment and recovery, and – a focus on cutting off the flow of illicit drugs from China.

According to Homeland Security, more fentanyl in larger volumes is seized at land crossings, but the fentanyl seized from mail and express consignment carrier facilities is far more potent with purities of over 90 percent versus Mexico-sourced fentanyl that is often diluted to less than 10 percent.

The president’s initiative would require the postal service to provide advance electronic data for 90 percent of all international mail shipments within the next two years, offering data that will help law enforcement identify and seize illegal substances shipped through mail. Private shippers such as UPS and FedEx routinely require such electronic data.

The administration is also scaling up the Department of Justice’s “darknet” enforcement efforts. Fentanyl in its various forms is relatively cheap and easy to buy from China online paying with cryptocurrencies, or even credit cards or money transfers.

fentanyl shipments from China

Over One Million Pills a Day – In One Factory in China

China has grown to become the largest mass producer of generic drugs and pharmaceutical ingredients in the world with over 5,000 pharmaceutical manufacturers. Upwards of 90 percent of the active pharmaceutical ingredients used in U.S. production of finished dosage forms of medical pharmaceuticals is imported from just two countries: India and China.

In addition, China has over 160,000 chemical producers and hundreds of thousands of pharmaceutical and chemicals distributors. The explosion in volume and number of producers has far outstripped China’s FDA (CFDA) from adequately regulating and monitoring them.

Faster Than Can Be Regulated

Unlike opioids derived from the poppy plant, fentanyl is a synthetic painkiller produced in a laboratory. It is 50 times more potent than heroine and 50-100 times more potent than morphine. Inhaling just two milligrams of pure fentanyl can be lethal.

In the United States, most fentanyl products are classified either as Schedule I chemicals, those that have no accepted medical use and high potential for abuse, or as Schedule II chemicals, those with medical use but only available through a non-refillable prescription.

Fentanyl’s molecular structure can be easily modified to create new derivatives, putting regulators constantly behind in evaluating and classifying each new variant one-by-one. From furanyl fentanyl, acetyl fentanyl, acryl fentanyl, to carfentanil — to name just a few — fentanyl has hundreds of analogues that differ slightly from the original, enabling criminal producers to operate in a gray territory while regulators struggle to ban the new substances. Legislation passed in 2017 now allows U.S. FDA to schedule fentanyl analogues immediately on a temporary basis while the agency conducts its investigations.

President Trump has urged President Xi to implement a similar approach. China currently controls around 25 types of fentanyl-related products. President Trump wants China to establish fentanyl as its own class of controlled substances, restricting all fentanyl analogues, including future fentanyl-like substances. Doing so would be a start.

Busting Drug Trade

Such a commitment by China is not, however, likely to put a dent in its fentanyl exports to the United States absent real enforcement. In recent years, CFDA has imposed stricter licensing requirements for pharmaceutical and chemical producers, but diversion, adulteration, and clandestine production remain significant problems.

“Chinese chemical manufacturers export a range of fentanyl products to the United States, including raw fentanyl, fentanyl precursors, fentanyl analogues, fentanyl-laced counterfeit prescription drugs like oxycodone, and pill presses and other machinery necessary for fentanyl production.” — U.S China Economic and Security Review Commission Staff Research Report

CFDA has undergone several reorganizations in the last few years. In the most recent, some of its regulatory responsibilities have devolved to provinces and counties with little accountability. Pre-marketing approvals will be managed separately from post-market inspections and surveillance. With just a little over 2,000 inspectors, authorities have little hope of effectively overseeing legal compliance, let alone spotting even a fraction of criminal activity.

The central government has assisted U.S. drug and law enforcement agencies, sharing information and intelligence that helps U.S. agencies target Chinese nationals trafficking illicit drugs in the United States. To alleviate the free flow of fentanyl from China, the Chinese government should also prosecute transnational criminals operating in China in high-profile cases with severe penalties.

Soybeans, Tech Transfer, and Fentanyl

Trade talks over soybeans and intellectual property protections for American technologies seem an unlikely setting for addressing illicit trade in deadly fentanyl.

There are some in the United States who are frustrated with this administration’s willingness to toss out the traditional trade policy playbook, but this is one case where it can welcomed by everyone.

 

 

Interested to read about fentanyl trade in more detail?

See two key reports produced by U.S.-China Economic and Security Review Commission analyst Sean O’Connor: Fentanyl: China’s Deadly Export to the United States, February 2017 and Fentanyl Flows from China: An Update, November 2018

Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last fourteen years as an Adjunct Professor at Georgetown University’s Master of Science in Foreign Service program.

This article originally appeared on TradeVistas.org. Republished with permission.

Soybean Transport Efficiencies: Containers Win the Export Race

Illinois, the global leader of producing and exporting soybeans, is uniquely positioned to efficiently export soybeans through container shipping or bulk barge to international markets around the world. With about two-thirds of Illinois soybeans destined for export, it’s crucial to ensure an efficient transportation process. Containers and bulk shipments of soybeans from Illinois can travel through the Gulf of Mexico, the Pacific Northwest, California and even the St. Lawrence Seaway to reach Asian markets.

Not only is container shipping faster, but it also results in higher quality soybeans by preservation in container. Standard freight containers are loaded and sealed, then transferred onto ships, trains and trucks with the goods secured throughout the transportation process. Shipping via container is on average 42 days in comparison to 51 days via bulk vessel shipping. For more information, visit: http://bit.ly/2WM8OuP

Containerized Shipping of U.S. Soybeans Spikes in Asian Countries

A recent report from the Illinois Soybean Association and the Federal Grain Inspection Service reveal containers shipping soybeans to Asian regions has spiked by 40 percent since 2014-2015.

Primarily led by Indonesian purchases, containerized shipping is experiencing an overall increase in demand for shipping U.S. soybeans to the specified region and shows no signs of slowing down. Additional information noted that container shipments of soybeans are expected to increase by 18 percent through August 31.

“Wider use of containers, thanks to the huge supply of empties in the Chicago area, has resulted in industry investments to increase the visibility and viability of this option,” said Eric Woodie, a trade analyst with the ISA checkoff program.

“There’s a major opportunity to take advantage of empty containers sitting idly in the U.S. and return them to export markets with soybeans. Not only does this help alleviate a significant problem in global trade, but it offers great value to international buyers, soybean exporters and Illinois farmers.”

Countries listed with the highest containerized soybean shipping include Indonesia, Thailand, Vietnam, and Malaysia. Indonesia is reported as the top buyer with a total of 1.4 million tons of soybean shipments. This method of shipping provides smaller companies the ability to minimize inventory investments while preventing lengthy delivery times, ultimately supporting added preservation.

As sales of U.S. soybeans to China plunge amid trade dispute, exporters need a new strategy to access international markets

Trade tensions between the United States and China are being felt across America’s heartland.

Prices for soybeans have tumbled and stockpiles are growing with the harvest nearly complete because exports to China, the largest foreign destination for U.S. soybeans, have plummeted. The latest federal data, through Oct. 25, shows American soybean sales to China have declined by 97 percent from last year’s harvest.

In response to U.S. tariffs placed on billions of dollars of Chinese goods, China imposed a 25 percent tariff on U.S. soybeans and shifted to buying soybeans from Brazil and other countries. Since tariffs were announced in June, the going rate of U.S. soybeans has fallen from roughly $10.50 a bushel to $8.34, as of Oct. 30, according to Markets Insider.

The timing of the trade dispute couldn’t be worse for American farmers. The USDA has forecasted that U.S. soybean production in 2018 harvest would rise to an all-time high of 4.6 billion bushels, up from 4.4 billion bushels a year earlier. The federal estimate for Illinois, the top-producing state, shows an increase of 12.4 percent to 688 million bushels.

While farmers hope for a new trade deal, there is urgency to find alternative markets for the oilseed. One of the keys to diversifying the U.S. export market lies in a 20-foot-long steel box.

Shipping containers dominate international trade. Yet, they are not widely used in U.S. agricultural exports. The movement of soybeans in 20-foot or 40-foot-long containers has represented 5 to 7 percent of total U.S. soybean exports in recent years. Bulk ocean vessels and rail to markets in Canada and Mexico are the current primary transportation methods.

But to enter new markets, smaller shipments will be needed, and container shipping is the solution. It offers several advantages over bulk vessels, including:

-Soybeans shipped in containers are generally higher in quality because they are handled less, reducing the amount of split and broken soybeans and foreign materials.

-Smaller importers can buy the measured quantities they demand, ordering soybeans only when they need them, as opposed to taking positions for large deliveries on bulk shipping vessels. “Just-in-time” inventory management, popularized by the Japanese and now prevalent throughout manufacturing, cuts costs and reduces waste.

-In the event there are logistical problems, the demurrage for containers is much lower than that of entire vessels, thereby minimizing the overall financial risk.

-Buyers seeking high-value or specialty soybean products can buy direct from smaller exporters. Importers in Japan use containers, for instance, to preserve food-grade soybeans.

-Customers can have their orders fulfilled much quicker. Three to four weeks is the typical turnaround time for the container shipping to Asia, compared with three to four months via the bulk vessel channel.

U.S. soybean exporters have been able to nurture markets in Taiwan and Indonesia by shipping in containers. Indonesia is now one of the largest importers of soybeans. In addition to producing animal feed, Indonesia uses soybeans to make foods such as tofu and tempeh.

Thailand, Vietnam and other countries in Southeast Asia are also using more soybeans as household incomes grow. Income growth leads more meat consumption, which in turn fuels demand for soybean-based animal feed.

Smaller international markets in Asia, Europe and Africa are perfect for container shipping because they haven’t achieved the economies of scale required to use the bulk transportation system.

Shipping by container also will help solve a major problem in the logistics industry. More than 11 million maritime containers arrive at U.S. ports each year. Most of those are coming from Asia, containing televisions, furniture, sneakers and other manufactured goods. But the imbalance of trade between Asia and the U.S. means about half of those are returning empty.

All this empty space on ships is a multi-billion-dollar loss for shipping companies, exporters and importers. Soybeans and other grains can take advantage of backhauling opportunities for ocean carriers repositioning empty containers.

Momentum to ship soybeans by container is growing. Soybeans loaded into containers in Illinois reached a new high of 66 million bushels in the 2017-18 marketing year ended Aug. 30, according to Informa Economics IEG.

But that represents about 10 percent of soybean production in Illinois, so there is a lot of room for growth. Illinois is the nation’s top producer of soybeans, is close to a sizeable supply of available containers and has several major railroads converging in the Chicago area.

The American economy depends on the exporting of soybeans and other crops. Even if China lifts the tariffs on soybeans, the trade standoff has sharply illustrated the need to cultivate new markets. Shipping by container can help lead the way.

Eric Woodie is a trade analyst with the Illinois Soybean Association’s Checkoff Program, and has over a decade of experience in export trade, foreign markets, and inland logistics.

 

Port of Vancouver USA Welcomes New Bulk Carrier

Vancouver, WA – The Port of Vancouver USA recently welcomed the bulk carrier Kypros Unity on her maiden voyage.

The Kypros Unity is a Panamanian-flagged bulk carrier launched earlier this year in Japan. The ship is owned by Gloverthree Shipping Corp., chartered by Mitsui & Co. Ltd. and operated by Safety Management Overseas S.A.

The vessel is 738 feet long and has a deadweight capacity of 78,056 metric tons.

The Kypros Unity called at Busan, South Korea, to take on fuel before calling at Vancouver, where she loaded more than 64,000 metric tons of soybeans for China.

Agricultural products, including soybeans, wheat and corn, are the Port of Vancouver’s top exports by weight. The port has exported 278,014 metric tons of soybeans so far this year, mainly to Asia.

10/31/2014