Shipping paradox: Ocean trips to China for $12 per ton give pause to those paying $30 per ton to ship via rail.It looks like fair seas and following winds for U.S. recyclers sending container ships to Asian markets. would describe exports of recyclables in containers as a growing business," says Paul Bingham, principal in the global trade and transport practice at Global Insight Inc., Waltham, Mass. "Demand out of China and all of Asia is particularly strong."
Not that long ago, it might run a U.S. recycler $1,800 to send a loaded container from the West Coast to China. Today, that same container can be had for a few hundred bucks.
"It's like a K-mart Blue Light special," says Mike McInerney, president of Celtic Logistics, Greet, S.C. "There are some huge bargains, but only 10 minutes to make the purchase."
BACKING UP. With McInerney's help, as part of our story we can follow a typical shipment of scrap paper scrap paper n → pedazos mpl de papel
scrap paper n → papier m brouillon
scrap paper scrap n → from the Eastern United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. to Shanghai:
Nov. 1, 2006
Buyer prices paper FOB FOB 1) adj. short for Free on Board, meaning shipped to a specific place without cost. 2) Friend of Bill (Clinton). (See: Free on Board) ramp. Buyer advises seller it will be shipped via ABC ABC
in full American Broadcasting Co.
Major U.S. television network. It began when the expanding national radio network NBC split into the separate Red and Blue networks in 1928. Container. Seller gets the empty container at the ABC yard, takes it home and fills it. The container will be delivered to a ramp in Memphis or Chicago.
The shipper got a good deal--it will cost $400 from Port of Long Beach/Los Angeles to ship our 25 tons of scrap paper in a 40-foot container to Shanghai. That is a fair price today in a market that ranges from $200-$900.
"Backhaul rates are very cheap," notes Bingham. "America is buying so many finished goods on the import side that carriers can't fill up the empties for the trip back to Asia. Big piles of containers are sitting empty.
The steamship steamship, watercraft propelled by a steam engine or a steam turbine. Early Steam-powered Ships
Marquis Claude de Jouffroy d'Abbans is generally credited with the first experimentally successful application of steam power to navigation; in 1783 his lines prefer any revenue to sending a box back empty. Even if they make only a little money, it is better than nothing.
The ships make their money on the trip from Asia to North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . The same container that ships baled paper to Asia, when filled with finished goods destined des·tine
tr.v. des·tined, des·tin·ing, des·tines
1. To determine beforehand; preordain: a foolish scheme destined to fail; a film destined to become a classic.
2. for Target or Wal-Mart, will fetch $3,500 to go to the United States. Even with a product like finished paper, it will command $2,400 for the trip to North America. "It's crazy," McInerney says. How long will it last?
"If anything, the risk is that prices will drop further in 2007," Bingham says. While Global Insight economists predict more growth in containerized con·tain·er·ize
v.tr. con·tain·er·ized, con·tain·er·iz·ing, con·tain·er·iz·es
1. To package (cargo) in large standardized containers for efficient shipping and handling.
2. shipping, it will be at a slower rate.
Meanwhile, capacity will grow. Steamship lines are betting business will increase. Super-sized ships are on order from Korean and Japanese shipyards. "We expect a 12 percent increase in bottom capacity, but we do not expect trade to increase," Bingham says. Orders for those ships extend to 2009. Plus, old ships (with smaller capacity) are not going offline.
"That translates to downward pressure on ocean shipping rates," Bingham says.
And that downward pressure is regardless of fuel rates. Even with bunker fuel adjustments, if fuel prices are less than $80 per barrel, costs will drop.
Container port throughput in the Americas expanded by 121 percent between 1995 and 2005, according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. a report by Ocean Shipping Consultants Ltd. (OSC O.S.C. n. short for Order to Show Cause. (See: Order to Show Cause) ), Surrey, U.K. That number stands at 71.2m TEU TEU Twenty-Foot Equivalent Units (intermodal shipping container)
TEU Technical Escort Unit
TEU Technical Escort Unit (Army)
TEU Tactical Enforcement Unit
TEU Treaty of European Union (20-foot equivalent units).
OSC says that the U.S. Pacific South range of ports increased its dominance in North American North American
named after North America.
North American blastomycosis
see North American blastomycosis.
North American cattle tick
see boophilusannulatus. market share during the 1990s, but the growth has leveled off. The share of shipments has remained in the 39 percent range since 2003. The other U.S. and Canadian port ranges all lost market share after 1995. However, the booming trans-Pacific traffic helped to boost the amount of material being handled on the West Coast--from Canada to Mexico.
Nov. 7-16, 2006
Scrap paper reaches port. Typically, this takes four to seven days, but it can stretch to 15. In this case, the buyer gave the seller a cutoff date of Nov. 9, so material should be at the ramp in the yard by Nov. 7. From here out, the ocean carrier is responsible for the container.
RAIL AND TRUCK. The one sticking point sticking point
A point, issue, or situation that causes or is likely to cause an impasse.
Noun 1. sticking point - a point at which an impasse arises in progress toward an agreement or a goal in the export business is here at home. Competition for both trucks and rail is strong. In fact, with increased diesel fuel costs, changes in the allowable hours of service and a recent inability for the trucking industry to attract new drivers, the pressure is on.
Most truckers do not haul only recyclables, either. "Forget about the ocean portion--getting your box to port will be the most expensive part of the trip," Bingham says.
A Midwestern recycling company will pay a lot more for domestic hauling than it will to move scrap across the Pacific. It can cost $800 to move that container from Chicago to Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. . Even drayage Drayage
A trucking company freight charge for the pick up or delivery of an ocean container. for a West Coast shipper can be as much as for the ocean trip. In fact, it is the low cost of the ocean part of the trip that makes exporting cost-effective.
Indeed, the long ocean voyage will cost about $12 per ton to China. But going from Chicago to Los Angeles costs $30 per ton.
It takes a couple of days to get material to the port and get it loaded. Some new, very large vessels take more than a day to load.
Nov. 20, 2006
Our shipment clears customs, is loaded on the ship (not in it--containers often stack several stories high on deck) and hits the deep blue sea.
TRANSIT TIME transit time
the time required for ingesta to pass through the gastrointestinal tract; a shorter transit time is seen in conditions associated with gut hypermotility, such as diarrhea. Delayed passage from any cause results in a longer transit time. . Our container of scrap paper will have a lot of company. Booming imports from Asia and steady economic growth in the western United States Noun 1. western United States - the region of the United States lying to the west of the Mississippi River
Santa Fe Trail - a trail that extends from Missouri to New Mexico; an important route for settlers moving west in the 19th century has put particular pressure on ports on the Pacific seaboard, OSC says.
Once a container of scrap is on a ship, sailing time depends on port-of call sequence. Few ships make one-stop trips from Puget Sound Puget Sound (py`jĕt), arm of the Pacific Ocean, NW Wash., connected with the Pacific by Juan de Fuca Strait, entered through the Admiralty Inlet and extending in two arms c. to Shanghai or Los Angeles to Hong Kong.
Dec. 7, 2006
After making one stop in Korea, our ship docks in Shanghai, China. Container is discharged.
"Two to three weeks on the water is a good rule of thumb," Bingham says.
Material moving from the Atlantic Seaboard and transiting the Panama Canal will likely spend 22 days on the water. So, the total shipping time could be more than 45 days, door to door.
Dec. 10, 2006
The container is discharged to the buyer, who received the paperwork more than a week ago.
In 2004, recovered paper was by far the leading commodity filling up containers shipped from the United States to China at some 524,000 containers. Next came mixed scrap metals at 172,000 containers. Then came cotton with 94,000 containers.
Dec. 13, 2006
Buyer's deadline to get container off the Port of Shanghai The Port of Shanghai, located in the vicinity of Shanghai, comprises a deep-sea port and a river port. In 2005, with a total of 443 million tons of cargo transported, it became the world's busiest port by cargo tonnage for the first time. and to his location. The port is not running a parking lot and charges the shipper extra if deadline is not met.
BACK TO THE USA. As soon as the container is emptied at any Asian city, it typically takes a day or two to refill it and have it on its way back to the United States or Europe, usually with high-value finished goods.
Dec. 16-18, 2006
Container is reloaded with finished goods headed back to the United States and is delivered to Port of Shanghai. The same container our scrap paper dealer paid $400 for now costs Wal-Mart $3,400 for the voyage to North America. That scrap paper, shipped from the eastern United States, is delivered to the paper mill to be converted into finished product.
The author, a Recycling Today contributing editor in the Cleveland area, can be contacted at email@example.com.
Europeans, too, are shipping materials to Asia. Shipments of these recyclables are competing with American scrap. Just as ,n America. fewer goods are going from the West to the East. so there is pressure to fill backhauled containers from European ports.
Meanwhile, the US. dollar has continued to drop, making American recyclables--paper, plastics and metals--more competitive on the world market.
"The supply side and dollar decline will work to the advantage of American exporters," predicts Paul Bingham. principal in the global trade and transport practice at Global Insight Inc Waltham Mass.