DC Velocity - August 2012

However, much like the golfer who reaches the green of a par- 4 hole in two strokes only to be sabotaged by his putter, all of this enormous export potential could mean nothing without the supply of properly positioned containers to haul the stuff.

Since the early 1990s, the quantities of container equipment—and where they flowed through U.S. commerce—have been pegged to the rapid growth of imports from Asia to the United States. However, the direction of loaded twenty-foot equivalent unit (TEU) container movements across the Pacific is as evenly balanced today as it has been for two decades, according to Walter Kemmsies, New York-based chief economist at Moffatt

& Nichol, a global infrastructure adviser.

Each March for the past four years, the United States has come close to net exporting more loaded TEUs than it imported, according to Kemmsies. If the trend persists as Kemmsies expects it will, the United States will become a net exporter of loaded containers during a year’s first quarter, while remaining a net importer during the traditional build-up leading into peak season.

But even during the traditionally strong seasonal cycle for imports, the directional imbalances will narrow as fast-growing Asian economies stoke year-round demand for U.S. capital equipment and foodstuffs, among other commodities, Kemmsies said.

Another factor likely to curtail Asian import activity is the growing practice of “near-shoring” production to Mexico and Central America. Near-shoring, designed to bring manufacturing closer to end markets in the United States, reduces demand for Asian-made goods because products can get to their destination in a few days instead of spending weeks on the water.

around containerized imports of retail merchandise unloaded in densely populated commerce centers is often not geographically positioned to transload capital equipment, lumber, and agricultural products that may originate in more remote regions.

In addition, many ship lines calling on West Coast ports are focused on port-to-port business and don’t have large-scale commitments with railroads to offer intermodal service to interior U.S. points at competitive rates. Thus, the boxes remain at or near the coast and beyond the reach of exporters.

Ted Prince, who runs a Richmond, Va.-based supply chain consultancy bearing his name, argued the problem isn’t the quantity of equipment moving around the country, but the cost of getting boxes to the proper export locations. “There are ‘empties’ in Dallas and Memphis, but not in Chicago,” Prince said. “There’s plenty of equipment, but nobody wants to pay to get it in the right place.”

Most U.S. exports do not consist of high-value goods because of the relatively high cost of domestic labor that goes into the production; this might explain why IT executives in the November 2010 survey were skeptical about the United States’ doubling the value of its exports by the end of 2014. Instead, the nation’s exports are predominantly what Prince classifies as “traded commodities,” meaning they are of relatively low value and can’t command the high per-unit selling prices of high-tech or electronic equipment. For ocean carriers, it is often too costly to ship empty boxes from the original U.S. import destination to a subsequent export origin just to haul inexpensive commodities to a port. Unless inland shipping costs decline or westbound trans-Pacific rates increase—neither of which is likely for the foreseeable future—“it’s just cheaper for the liners to move empty boxes back to the West Coast from their import origin points,” Prince said.

“The surplus [of equipment] is in the cities, and the demand is in the hinterlands,” said Phillip M. Behanna, senior vice president of International Asset Systems, an Oakland, Calif.-based firm that helps customers reposition containerized equipment.

Henry L. (Rick) Wen Jr., vice president of business devel-opment/public affairs for the U.S. arm of liner company Orient Overseas Container Line Inc., echoes that view. “Imports drive the locations where equipment is abundant, and large population centers like Los Angeles and New York-New Jersey have surplus equipment,” Wen said in an e-mail. By contrast, exports from the Pacific Northwest and certain Midwest markets currently face equipment deficits, he said.

Since so much export traffic originates from remote locations, Wen said, “cost becomes a factor if carriers are expected to position empty equipment into demand areas for lower-valued cargo.” Much of the time, he said, the expense isn’t worth the effort.

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food producers have a strong need for finished feedstock.

John Fornazor, president of Fornazor International, a New Jersey-based producer and exporter of feeds and grains, said at the Norfolk conference that he sees strong potential in Africa, where arid climates make it difficult for countries to grow their own foodstuffs. “We are very, very high on that part of the world,” he said.

John R. Wainwright, head of international trade compliance for Leggett & Platt, a Carthage, Mo.-based manufacturer of residential, commercial, and industrial components, said international consumers’ expanding wealth and consumption habits would be a major boon to U.S. exporters. “I am very encouraged about the growing middle class overseas,” he told the conference.