In recent years there has been a growing push towards using container ships rather than traditional dry bulker ships, boosting scope for volume growth in the box ship market, which is struggling with a surplus of vessels due to stagnating demand in crisis-hit Europe and the United States.

"As overcapacity haunts all shipping sectors the hunt for new commodities is on-going," said Peter Sand, chief shipping analyst with trade association BIMCO. "The box industry is always on the hunt inside the dry bulk market."

Sugar industry sources say for bagged white sugar cargoes, container transportation is increasingly the preferred option.

"For a start sugar arrives in better condition because it is not being handled so much. You can tailor the tonnages much more precisely. There is also greater security from theft using sealed box containers," one international sugar trader said.

"It also means you can work in smaller parcel sized cargoes of a few boxes - how many people can afford a 14,000 ton vessel of sugar?"

Containers are usually shipped in 20 foot boxes and a standard container can hold around 22 to 27 tons of white sugar, another trade source said.

"Using a container is cheaper by about $25 a ton because of the costing - there are no discharge or loading fees and it's a much faster despatch."

Jonathan Drake, former head of sugar at international trade house Cargill, is among those hoping to take advantage of the growth. He has set up a new company, RCMA Sugar, that will aim to target container trade.

"We expect to develop a technological solution to make it easier to handle paperwork - it's not quite an internet platform, but similar," Drake said.

"We are confident the future belongs to the company that can crack this operating system."

Containers transport myriad consumer goods ranging from food for supermarkets to Nike running shoes to Apple computers. The Asia to Europe route is among the biggest and also presents cost saving opportunities.

"You often get cheaper rates going from West to East because container lines are looking to reposition containers in the Far East, which is why it also makes sense. The insurance costs are also lower given we are talking about sealed box containers," another market player said.

Dedicated Container Berths

In Brazil, the world's top sugar producer and exporter, containerized sugar berths have expanded in recent years and occupy dedicated areas at ports, facilitating efficient movement of the sweetener.

In contrast, conventional shipments carrying bagged white sugar not in containers would struggle for quayside space in Brazil. They are competing against much more efficient larger bulk carriers which are quicker to load with raw sugar.

"On many routes the container rate is cheaper than the break bulk rate, and we have seen a huge increase of flows out of Brazil, particularly out of Santos port, and Thailand," another trade source said.

Containerized sugar trades are ideal for buyers with limited financial resources and tonnage requirements.

"If you are importing white sugar, you may not be a large, well-capitalized entity, so you may only be able to afford small quantities at a time - containerized sugar trade is the best option," another trader said.

Traders say the main drawback of using containers is a lack of control over delivery times, due to re-routing.

"When you charter a ship, you have control. But with containers you often get trans-shipped - and this can mean delays in deliveries," a senior trade source said.

RCMA's Drake said: "The only drawback is that vessel carriers treat bookings like bus tickets - if they can't pick you up, be patient as the next one will soon be along." (Reuters)