Is it a cyclical phase or a systemic change?By Peter A. Buxbaum, AJOT It is clear that the United States economy is experiencing a surge in exporting. So much so, that some exporters are heard to complain that they are unable to line up containers when they need them. The confluence of a number of circumstances, including the weaker dollar, have created a spike in demand for the wastepaper, scrap metal, chemicals, and agricultural products that the US has to offer. It is beyond dispute that exporting has absorbed so many boxes, that they are hard to find, at least in some locations. What is unclear at this point is whether this phenomenon represents a sea change in international trade patterns, or whether the export surge is a passing phenomenon, one that will return full circle if and when the dollar regains some of its former value. The fact of an equipment shortage could mean that carriers see this as a temporary phenomenon, one, which does not justify big changes in their container repositioning operations and the costs that would involve. Or, it could mean that their actions have not yet caught up with the reality on the ground. Time will tell. “The shortage of export equipment is due to a very strong US export market that is a result of the weak dollar,” said Joseph Abboud, director of ocean services at SEKO, a freight forwarder and logistics services provider based in Itasca, IL. “At the same time, since imports have slowed down in the US, the supply of inbound containers has decreased domestically.” The increase in exports aggravates the container supply cycle, too, because using the boxes for export prevents carriers from turning them around in Asia. Positioning a box to be stuffed for export takes it is out of commission for a period of time. “The cycle time for exports is huge,” said Ted Prince president of Consolidated Chassis Management of Jersey City, NJ, and a member of the board of directors of the University of Denver’s Intermodal Transportation Institute. “There can be a wait of six months until the box is unloaded and available again.” The question, for Prince, is not whether there is an equipment shortage but whether equipment is positioned in the right places. “If you want to export from Memphis, there are plenty of containers,” he said. “If you are exporting from Chicago, there aren’t. The balance of trade in Chicago is such that there are more exports from Chicago than imports to Chicago. The opposite is true in Memphis. “There is plenty of export traffic but the rates are not so great that carriers can afford to reposition the empties,” he added. “It can cost $600 or $700 to move the box, and you have to add fuel costs and bunker surcharges on top of that.” A similar phenomenon took place in the mid-1990s, according to Prince. “People look at exports and say there is so much volume but if you look at the rates they’re not that great,” he said. “If the rates were higher, then carriers could afford to reposition more empty boxes.” US exports constitute primarily low-value raw materials and commodities, commanding low freight rates. “The current administration has tanked the strong dollar,” said Prince. “This is great for exports but there are not a lot of manufactured products being exported from the United States. Basically 80% of it is grain, wastepaper, frozen poultry, forest products, and the like. These are low-value commodities that are traded at prices quoted out to five decimal places.” It is the weak dollar that is primarily responsible for making these commodities attractive overseas, according to Prince. “If rates went up and the dollar recovered, trade patters would return to where they were before,” he said. “This is not a critical change that the lines need to adapt to. It’s not like when business was outsourced to China and we saw structural changes in import flows and balances.” Abboud has noticed that agricultural products such as grain are absorbing the supply of containers on all ocean traffic lanes. “The supply of c