The Determinants of Containerised Grain Shipping

Abstract

Increasing globalisation and lowering ocean freight help each nation focus on producing commodities of its specialty. With high quality but low paid labour, Asian nations have manufactured delicate industrial products and sold them to the EU and the US. North America has large arable lands that are suitable for planting agriculture (e.g., grains) with large farming machinery. The harvest grains can then be exported to the Asian nations. The major grains trade in the cross Pacific Ocean route could include soya bean, corn and wheat. The rapid increase of dry bulker freight between 2002 and 2008 forced the grain importers and shippers to ship their grain cargo by dry containers. It is estimated the containerisation ratio was around 80% in 2008. The grain containers could be used to control the freight cost for grain importers, and the grain cargoes can be transported on a door-to-door basis. It increases the importers’ competitiveness because of its door-to-door service ability, its low ocean freight and small parcel size, reducing grain silo storage time and avoiding high inventory cost occurred by lengthy in-transit time. In short, the total logistics cost of imported grain cargoes can be reduced by using the container shipping service. Historical data reveal that only around 50% of containers exported from Asia to North America can find backhaul cargoes because many empty containers were trapped in North America in the 1990s.