MSA filed written comments for the hearing the STB will officially hold on February 24 in Washington, D.C. The hearing had earlier been set for December 9, 2010 but was postponed at the request of stakeholders, including railroad trade associations to give them time to respond. January 31 was the deadline for filing written comments.

Midwest Shippers called for changes in the current regulatory exemptions policies for certain commodities, certain box car service and essentially for all intermodal container rail service.

MSA made several measured recommendations, according to Bruce Abbe, MSA executive director, including:
- Establishing reporting and increased transparency in rail intermodal shipping rates and services;
- Reasonable repositioning rates for moving containers to areas where they are needed;
- A closer relationship of intermodal rates to distances and actual costs;
- And maximizing short line railroads’ ability to contribute to the intermodal system, to improve hub and spoke systems for assembling larger volume trains.

“Midwest Shippers Association fully understands and supports that both the railroads and the ocean carriers need to be profitable enterprises. We depend upon them to deliver our products worldwide, and we know they need to make money – just as our member grain exporters’ businesses must be profitable to continue to provide the valuable service they provide,” Abbe said.

“We do not believe, however, this should mean extreme profits that comes at the expense of shippers and our customers to the extent that it threatens the sustainability or existence of our supply chain businesses.”

Effort needs to be made to mitigate trade competitiveness problems caused by increasing rate disparities between the one or two favored North America inland large population areas, compared to other large and moderate population areas the intermodal rail lines now run through. Abbe cited growing rate disparities for shippers using the Upper Midwest Twin Cities and Omaha area container rail yards, compared to the large Chicago and Toronto, Canada intermodal rail served areas, noting the disparities threaten the competitiveness and sustainability of many Upper Midwest agricultural premium grain and soybean exporters.

Key inland rail container yards, notably the Twin Cities yards, often experience shortages of equipment for exports, sometimes desperately so, Abbe noted.

“Intermodal container shipping is a critical factor for America’s export competitiveness. Yet the system’s interdependent rail and ocean carrier partners now gear their operations largely to serving importers. If we are not using it as it is capable of being used to serve our exports, then we are figuratively and literally missing the boat,” Abbe said.

“We urge the Surface Transportation Board to take steps to change the current blanket exemption from any regulation of intermodal rails service, and to establish reasonable oversight practices and procedures that will lead the rail intermodal industry to adopt fairer, more appropriate rates and services to serve America’s exporters and importers,” Abbe said.

The place to start is to “lift the veil the industry maintains over its real intermodal rates and service practices” through their current strict confidentiality requirements.
To view the full Midwest Shippers Association comments to the STB hearing, contact: info@mnshippers.org to request a copy.

The Midwest Shippers Association is a regional trade association cooperative made up of producers, processors, interntional traders and exporters of grain, oilssed and food ingredient products based in the Upper Midwest states of Minnesota, North and South Dakota, Iowa and Wisconsin. MSA’s membership also includes shipping logistics and grain industrsy service suppliers. MSA’s members export premium value grains and oilseeds to international customers worldwide.

Source: Midwest Shippers Association, February 5, 2011

According to the U.S. Energy Information Administration monthly and weekly data, U.S. ethanol production in 2010 reached 13.4 billion gallons with plant capacity utilization rates above 95 percent for most of the year. This production level now approaches the 15-billion gallon per year (bgy) cap set by the 2007 Energy Law (EISA/RFS2) for corn starch ethanol by 2015.

Despite the recent announcement by the Environmental Protection Agency (EPA) that automobile models newer than 2001 are now able to use E-15, the 15-bgy corn starch ethanol cap and the slow pace of commercialization of the next generation biofuels, are the primary reasons for the projected slower growth rate of ethanol production in 2011.

During the first three quarters of 2010, U.S. ethanol production reached 9.7 billion gallons, up 23 percent from the same period last year. During that period, the major railroads in the United States moved 274,486 rail carloads of ethanol, up 26 percent from the previous year. Higher utilization of unit trains (trains with 80-100 railcars) and more rail-accessible blending terminals may be the primary factors for this increase.

For most of 2010, shippers of distillers grains continued to increase their reliance on rail service. During the first three quarters of 2010, railroads moved 65,909 carloads of distillers grain, up 32 percent from the same period last year.

The growth in movement of distillers grains by rail has been faster than that for ethanol, possibly due to the growing export market, which relies on rail transportation to deliver the product to port from the ethanol production regions in the Midwest.

During the first 11 months of 2010, exports of distillers grains totaled 8.2 million metric tons, up 47 percent from the previous year.

The outlook for ethanol in 2011 is mixed. Profitability of ethanol production is threatened by rising grain prices due to tighter global supplies. However, EISA/RFS2 mandates and the rising petroleum prices could mitigate price risk, enabling ethanol producers to maintain capacity utilization rates and keep moving the product to market via rail.

Source: USDA Grain Transportation Report, February 10, 2010

Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC), said there has been a “turn in attitude, a sea change in view of the purpose of the FMC. It has been highly constructive.”

In the past, Friedmann said he and others did not view the FMC as “an entity trying to facilitate exports. To the extent that they are now, that is a welcome development.” He praised comments from FMC Chairman Richard Lidinsky that he will work to assure sufficient capacity for agriculture exports.

“The people who have been most involved in moving the legislative and regulatory process forward, that is the agricultural exporters, are very supportive of what the FMC is doing,” he added.

Friedmann noted AgTC members testified before Congress in hearings that eventually led to the introduction of a bill by Rep. James Oberstar, D-Minn., to eliminate antitrust immunity for liner carriers and give additional powers to the FMC. Group members also participated in the FMC capacity investigation, and in face-to-face discussions with ocean carriers initiated by the FMC this summer.

AgTC’s praise for the FMC probe contrasted with criticisms leveled by the National Industrial Transportation League, which expressed disappointment in the limited amount of information the FMC has released about the fact-finding investigation, and what it said was a suggestion by the FMC that “the solution to the problems experienced by U.S. exporters and importers be developed through collaboration between ocean carriers and their customers with the FMC taking on the unconventional role of a commercial facilitator.”

The NIT League suggested it might seek more information about the FMC investigation through a Freedom of Information Act filing, “with all appropriate redactions to protect the identities of those interviewed.”

Friedmann said the decision by FMC Commissioner Rebecca Dye to interview shippers confidentially during the fact-finding investigation “provided an environment in which they could get real information and real experiences from shippers and forwarders who otherwise would not have come forward.” He added, “exposing that information or those individuals who testified would be not only a tremendous breach of faith but I am not sure legally they could do so.”

Another group, the Pacific Coast Council of Customs Brokers and Freight Forwarders, also issued a statement applauding the actions of the FMC, saying many of its members had participated in the fact-finding investigation and said the FMC had been “true to its word to keep these interviews with forwarders and shippers confidential; had it not made that commitment, many forwarders and shippers would not have come forward, and the Commission would not have the information it needed in order to initiate solutions to their concerns.”

Friedmann said he was pleased with actions taken by the FMC as a result of the fact-finding investigation.

These include the creation of so-called “rapid response teams” to mediate disputes between shippers and carriers.

“Those are not to be underestimated, they are precisely what many shippers need, and what in fact agriculture exporters are utilizing right now,” he said. He said they are designed by the FMC to help in “the real process of ocean shipping, when there are hiccups in the process which are undermining agricultural exports.

“For example, if accurate and timely bills of lading cannot be obtained before a letter of credit expires, major agricultural exports cannot be made, sales fall through. The FMC has committed resources to addressing that very real problem.

Friedmann also praised the FMC’s decision to form “working groups” to address issues such as service contracts and container availability.

He said the FMC said it would initiate the service contract review after its investigation found “smaller shippers could use some assistance in understanding ocean transportation contracts and in gaining provisions that were fair. I think that there was a sense … that smaller shippers, in particular, do not have the negotiating leverage to get provisions that many would say would be reasonable.”

Friedmann noted that six agriculture exporters participated in face-to-face meetings arranged by the FMC with six senior carriers executives this summer.

He felt these were “very constructive” and said “this hasn’t happened before and again it is a change in the commission’s view of what it can do to facilitate commerce in a non-adversarial way.”

Will meetings like this have a long-term benefit on large numbers of shippers?

“Time will tell,” he said. “The FMC has been around since 1961, and we are three months into the FMC taking a different approach which is open and welcoming to exporters and importers.” — Chris Dupin

Shippers are more likely to find supply and demand in better balance going into the new year, a year after burgeoning U.S. import and export demand outstripped the supply of ships and sent companies scrambling for vessel space.

But some industry observers and carrier executives warn a second wave of constrained capacity is forming, a wave they say is fed by an ongoing restraint in the market for ship finance, and which could leave shippers facing tight capacity again as early as 2012
.
Ocean carriers have brought laid-up vessels back into service and are taking delivery of enough new ships to meet expected demand in 2011. They’re also sending messages, however, that they will carefully manage supply and will not deploy more capacity than immediately needed.

Carriers and analysts alike say there will be plenty of capacity available to handle any growth in demand next year, but even that ship capacity is not the whole story for many shippers. Container equipment, operators say, still will be in short supply in 2011.

“The slow recovery has affected the mindset of the people who build containers, so there’s been a capacity reduction all across the chain, not just the people who build ships, but also containers,” said Ron Widdows, CEO of Neptune Orient Lines, parent of container ship operator APL.

The two Chinese companies that make containers have restarted production, but are not yet producing enough boxes to meet expected needs next year, and those they are making are expensive — $2,700 for a 20-foot container, compared with $1,500 per box three years ago, Widdows said.

The potential constraint on container supply is one part of what a growing lineup of freight industry executives is warning will be a kind of delayed impact of the 2008-09 downturn.

The cutbacks in capacity and costs, they say, have left carriers just as focused on lean inventory as their customers, with little enthusiasm or financial backing to bring back capacity in big numbers.

That’s especially true, some say, in the United States, where transport networks contracted sharply during the deepest economic downturn in generations.

“It won’t be long, if we get any kind of good economy, until we’re back where we were in 2006, with chronic shortages of truck and rail capacity,” Matthew K. Rose, chairman, president and CEO of BNSF Railway, told attendees at this month’s Transcomp/Intermodal Expo meeting.

The Journal of Commerce Magazine – News Story

Ocean container carriers may struggle to push through freight rate hikes planned for January, an analyst said.

The conditions that enabled container lines to sharply boost rates at the beginning of 2010 are “noticeably absent” for the next round of increases, according to Paris-based Alphaliner.

Carriers were able to push through rate hikes in January 2010 because deep capacity cuts on Asia-Europe and trans-Pacific routes coincided with a surge in cargo demand driven partly by inventory re-stocking in the U.S. and Europe.

A shortage of containers further tightened capacity, triggering a scramble for space that enabled carriers to push through a series of rate hikes that sparked the recovery in the container shipping market.

These factors are missing in today’s market as carriers prepare to lift rates by $500-$600 per 40-foot container on Europe-Asia routes and set a $400 per 40-foot guideline increase for the 2011/12 trans-Pacific contract season.

“Carriers have made only modest capacity reductions during the current winter period, and some even continue to add new capacity despite only moderate utilization levels,” Alphaliner said.

The current weekly capacity on the Far East-Europe and Far East-North America routes is 19 percent higher than 12 months ago.

The idled box fleet currently stands at 147 container vessels with a combined capacity of 356,000 20-foot equivalent units compared with a peak of 1.5 million TEUs a year ago.

Meanwhile, inventory levels in the U.S. reached a new record high in November as stock replenishment appears to have reached a peak.

Shipping volume peaked early this year and no significant surge in cargo volume is expected in late December on the eve of the planned rate hikes.

Carriers are counting on a repeat of the market rally in January 2010 to reverse the steady decline in freight rates, which has seen spot rates from China dropping by 29 percent from their July peak.

But modest capacity cuts and high inventory levels “suggest that the carriers’ planned price increases will be less successful this time,” Alphaliner said.

Barring further capacity cuts there will be sufficient capacity in late January when shippers rush to move goods ahead of China’s Lunar New Year holidays which begin on Feb. 3.

The Journal of Commerce Online – News Story

U.S. exports are on a near-record pace, but capacity and equipment shortages could stunt the growth.

U.S. containerized exports to Asia are accelerating and could approach record levels this winter, but vessel space and equipment shortages could keep them from reaching their full potential.

For now, several factors are working in exporters’ favor. The dollar remains weak, making U.S. goods more competitive, and freight rates are favorable after carriers wobbled in their bid to implement a Nov. 1 general rate increase.

Demand is surging for U.S. agricultural products, especially cotton and grain, because of weather-related crop damage in countries that compete with U.S. exporters. Severe flooding eroded Pakistan’s cotton exports, for example, and Russia suspended grain exports after severe heat seared that crop.

But in what has become a painful thorn for U.S. exporters and an impediment to the Obama administration’s National Export Initiative goal of doubling exports in five years diminishing vessel capacity during the winter and shortages of marine containers and trucking capacity at inland locations may prevent U.S. containerized exports to Asia from reaching anticipated levels.

Exports at West Coast ports, which handle about 70 percent of U.S. exports to Asia, were up 7 percent through September compared to the same period last year, according to the Pacific Maritime Association. If monthly exports maintain momentum, 2010 will be the second-busiest year on record, falling about 6 percent short of 2008.

Cotton exports, however, are moving much earlier this fall than in past years, meaning the next three months will see a significant increase in exports.

Cotton exports are building in November. December will be strong, and January will be strong, said Ed Zaninelli, vice president of trans-Pacific westbound at Hong Kong-based Orient Overseas Container Line.

The dynamics of U.S. commodity exports this year are more favorable than in 2008, according to economics forecasting firm IHS Global Insight. In 2008, a spike in commodity prices and ocean freight rates capped soaring U.S. exports. Then the global recession hit, and overall exports declined 18 percent in 2009, to $1.3 trillion, according to seasonally adjusted Commerce Department figures.
Commodity prices have increased this year, but the weak dollar has kept U.S. prices competitive. Exchange rates make U.S. exports more attractive,” said Brandon Kliethermes, an IHS Global Insight economist. There also is sufficient ocean vessel capacity this year compared to 2008, and that has kept liner rates in check, he said.

In 2008, a shortage of bulk vessels the overwhelming mode of choice for grain exports sent bulk freight rates sky high, so some grains migrated to containers. That forced container freight rates in the westbound Pacific higher. This fall, there is sufficient capacity in the bulk sector, and container rates in the westbound Pacific have been stable.

Carriers announced a westbound general rate increase of $300 per 40-foot container effective Nov. 1, but most lines failed to get the full rate increase, said Bob Weiss, independent administrator of the Food Shippers Association of North America. Rate increases ranged from $150 to $240, with some lines dropping their GRI, he said.

The U.S. exports a number of agricultural commodities, from corn, soybeans, cotton, barley and sorghum, to sunflower seeds, peanuts and rice, in addition to chilled fruits and frozen meats and seafood. Some commodities move mostly in containers, while others fluctuate between containers and bulk vessels depending upon capacity and freight rates.

Generally, U.S. agricultural exports are increasing, a trend that should continue over the long term as the middle class in Asia, especially China, increases rapidly. According to the U.S. Grains Council, exports of farm commodities to China totaled $10 billion in 2009, up 300 percent from eight years ago. And 2010 could be a record year for exports of corn and byproducts such as distillers dry grain, which is used for animal feed, said Kevin Latner, the grain council’s director in China.

As shippers learned in 2008, booming exports can result in shortages of vessel space and equipment. Cotton shippers in west Texas already are experiencing a shortage of equipment and truck capacity, said Don Lake, vice president of international operations at Centrix Logistics in Memphis.

Cotton typically moves from the field to mills and then to storage, with exports occurring from January until summer, Lake said. Demand in Asia is strong, though, so the peak will be from November to late March. A spike in cotton exports could overwhelm the transportation infrastructure. Stricter safety requirements and hours-of-service limitations for truckers would restrict capacity even more, he said.

Today’s trucking shortages could become severe in the coming months, and Lake said he fears there will be a shortage of empty marine containers in Dallas. A portion of the west Texas export crop is stuffed into empties in Dallas, and a container shortage there would exacerbate an already difficult situation.

West Texas cotton also moves by rail from Lubbock. Rail capacity shouldn’t be an issue because BNSF Railway has sufficient locomotive and railcar capacity in Lubbock, spokeswoman Krista York-Woolley said. BNSF is likewise hearing that this will be a record crop.

If demand continues to increase, additional intermodal loading capacity will be added in that area, she said.

Securing empty marine containers, however, is a perennial problem for many agricultural exporters. Zaninelli said the situation would be no different this winter.

The U.S. midsection from the Gulf to Chicago will be tight, as will the Pacific Northwest. There are always plenty of empty containers and sufficient vessel capacity in Los Angeles-Long Beach, if shippers can get their products there. There should be sufficient equipment at East Coast ports, although vessel space will be tight, he said.

Weiss said vessel capacity could be a problem this winter, as it was last winter, if carriers pull too much capacity out of the trade for the traditional slack season drop in eastbound shipments. But there are more niche carriers in trans-Pacific trade, and these smaller lines don’t cut capacity because most operate only one string of vessels in the Pacific.

Weaker cargo demand drives carriers to cull capacity on key routes
The number of idled container ships, which has shrunk rapidly over the past year, is set to increase sharply through the fourth quarter as ocean carriers cull capacity on key routes, a leading industry analyst said.

The jobless fleet, which currently stands at 225,000 20-foot equivalent units, could rise to between 600,000 TEUs and 1 million TEUs by the end of the year, according to Paris-based Alphaliner.

No carrier has yet confirmed its new winter schedules but capacity cuts are planned as lines move to bring supply and demand into balance as cargo volumes show signs of weakening after surging over the past nine months.

By The Numbers: Asia-Europe Westbound Container Traffic.

The majority of the ships facing lay up are likely to be above 3,000 TEUs capacity due to the seasonal adjustments on the line haul Far East-Europe and Far East-North America services.

These ships have limited alternative deployment options and will most likely be placed in short term lay up, according to Alphaliner.

The reduction in the idled fleet to 225,000 TEUs from 1.5 million TEUs in January has been driven by the rapid redeployment of laid up ships for new services.

The spread of extra slow steaming across the industry also has absorbed around 320,000 TEUs of capacity since the beginning of the year.

The bulk of the laid-up fleet was re-activated despite the delivery of 1.21 million TEUs of new vessels so far this year.

“However, the decline of the containership fleet looks certain to be reversed in the next few weeks as seasonal volume reductions are due, especially on the Asia-Europe trade where some 10 percent of the ships currently deployed could be removed,” Alphaliner said.

At least three services are expected to be removed from the Far East-Europe route, as well as a further two on the Far East-Mediterranean trades.

This would swell the unemployed fleet to about 300,000 TEUs with some fifty vessels of 3,000 TEUs to 8,000 TEUs freed up.

Eivind Kolding, chief executive of Maersk Line, the market leader on the Asia-Europe route, has said the carrier expects to lay up tonnage at the beginning of the fourth quarter as cargo demand slows.

“There will be simply too much capacity in the market, so our response will be to take out some capacity from the start of October,” he said.

House leader would end carrier antitrust immunity, impose new shipper protections

Decrying ocean container carrier business practices, the head of the House Transportation and Infrastructure Committee called Thursday for the end of antitrust immunity for vessel operators in the United States along with a wide range of new restrictions aimed at protecting shippers.

Rep. James L. Oberstar said carrier actions including rapid enactment of surcharges, bumping shipments from vessels and refusing to carry certain containers have caused widespread problems for retailers, costing them business as they try to recover from the recession and driving up costs for American consumers.

Oberstar’s strong statements at a shipping industry policy forum raised the possibility that Congress could undertake the most sweeping look at ocean transport regulation in more than a decade and impose new restraints on how carriers operate in the market and interact with their shipper customers.

“I think we should end the antitrust immunity that allows the carriers to talk to each other about rates, and if we replace that with full competition there will be a real marketplace that would see improvements in rates and service and delivery to consumers,” the Minnesota Democrat told the annual Washington Freight Transportation Policy Forum of the National Industrial Transportation League.

Oberstar did not say he has prepared legislation, and there’s likely little chance of drawing up and passing an ambitious new bill in the short period left before this fall’s elections. But his comments marked the strongest statement yet from a public official about controversies that have roiled the container shipping world since last year, from volatile swings in pricing to widespread reports of “rolled” containers in Asia and complaints from U.S. shippers of container shortages that are hurting export opportunities.

Pointing to comments from shippers at a recent hearing in Congress, Oberstar took aim at the broad state of the container shipping business since last year’s downturn and detailed specific areas he wants to address, including regulation of surcharges, limits on vessel sharing agreements, and deeper Federal Maritime Commission oversight of the basics of shipper-carrier contract relations.

That includes, he said, a bar against “the practice of bumping and rolling” containers, something shippers said has become especially prevalent in Asia as demand for space to Europe and the United States has far outstripped vessel capacity. Oberstar said new barriers could be modeled on the protections airline passengers have when they buy tickets.

“Aviation law prohibits airlines from engaging in deceptive practices and overbooking a flight without providing compensation. We need to protect shippers and consumers. We may have legislation to direct the (Federal Maritime Commission) to prohibit such deceptive practices,” he said.

He said he is particularly concerned with reports from some shippers that some carriers have refused to board containers not owned by the carrier. “e need network neutrality in ocean transportation,” he said.

And he criticized the carrier surcharges that have increased rapidly over the past year. “There are charges that are not necessarily based on costs,” he said. “We have to clarify that they have authority on such charges – do they provide notice in advance of increases, are there explanations of the charges? There has to be a process so shippers and consumers are not at a disadvantage.”

Oberstar says new regulation could include restrictions on the vessel sharing agreements that carriers have used to extend services while spreading risk. “The European Union restricts VSAs to 30 percent of the capacity in a single trade. That may be a reasonable place to begin,” he said.

“The ocean carriers sold the world on just-in-time,” he said. “It’s something they marketed and the shippers of the world believed them. And now the carriers have failed to live up to that promise.”

Congress has not broadly addressed ocean regulation since the Ocean Shipping Reform Act of 1998, which brought a new measure of deregulation to the industry following the Shipping Act of 1984.

Commission to pursue fact-finding through peak shipping season

The Federal Maritime Commission granted Commissioner Rebecca Dye a three-month extension of her fact-finding into vessel capacity and equipment shortages, putting off completion of a report until the end of this year’s peak shipping season, The Journal of Commerce learned.

Sources within the commission said the extension was granted in a closed session Monday, when the fact-finding was due to be completed. The investigation began in March after U.S. exporters complained they were unable to secure containers and chassis, and that carriers’ reduced schedules had curtailed vessel capacity.

The issue also attracted congressional attention. Rep. Elijah Cummings, D-Md., chairman of the House Transportation subcommittee on Coast Guard and maritime transportation, led a hearing on March 17 at which FMC Chairman Richard A. Lidinsky Jr. announced the fact-finding mission.

Cummings is scheduled to hold a follow-up hearing June 30.

There is a disturbing undercurrent in the chaotic scramble in Asia for slot capacity on ocean container lines, at least for shippers: a shortage of containers themselves. This threatens to prolong the capacity squeeze beyond the period when everyone would presume the return of laid-up capacity would bring vessel supply and demand back into balance.

It’s a sign of a growing concern as summer begins, when the year’s strongest volumes are just a few weeks away. And, although container construction is rebounding rapidly from a virtual standstill last year, unprecedented — and perhaps long-lasting — market dynamics are emerging.

Box manufacturing is not rebounding as quickly as demand would warrant, in part because it appears skilled laborers in coastal China, where virtually all containers are built, are not as plentiful as they once were, possibly prolonging the period of undersupply. More significantly, longer-term trends suggest even more boxes will be needed to satisfy the same level of demand the Asia-based trade lanes have seen in the past.

These developments include slow-steaming by carriers — which some believe may persist as long as oil prices stay high — as well as the extension of supply chains deeper into China and the development of two-way trade in major markets that had been heavily imbalanced.

In an interview last month in Geneva, we asked Gianluigi Aponte, head of Mediterranean Shipping, whether there is, in fact, a looming container shortage.

Here is his full response: “I believe it’s true. I will give you an example. When the dollar was very strong, we were carrying full vessels to the States. But our ships were coming back to Europe and Asia with very few full containers. We were repositioning mainly empty containers. And so what is happening today is that we carry, let’s say 3,000 containers to the States, and we come out with 3,000 containers full. What happens when you do this is that the 3,000 containers that you brought in, they go for discharge to the client and they come back empty. And they go to another client to be filled again and come back full. And then they are shipped to the destination. When they get to the destination, they go to the client, who has to break down the container and bring it back.

“So the idle time of the container in the States, if before it was a week, now has become three weeks, and the same in Europe. So in other words, where you needed, let’s say two containers, now you need six containers. That is the reason why today there is a shortage of containers, and this is worldwide. For example, China was importing very little and exporting a lot in the past. Today, they are still exporting a lot but they import a lot because the country is starting to consume.

Add to this slow-steaming, which requires an estimated 5 to 7 percent more containers to carry the same amount of cargo, and it’s clear that new operating dynamics are in play.

The pressure on manufacturers is building. Since the third quarter of 2009, when factories began reopening after a year of inactivity, 34 are reportedly now in production and will turn out an estimated 1.9 million TEUs this year, more than five times last year’s total but still less than the 2.6 million to 4.2 million produced annually before the recession, according to a May 18 Nomura Securities report.

Given an expected 1.5 million TEUs of disposals (some believe that estimate is high), Nomura estimates the global container fleet will grow only 1.9 percent this year to 27.6 million TEUs. This is against forecast cargo volume growth of 10 to 12 percent. Nomura sees the global fleet growing just 7 percent in 2011. That sounds like a shortage, and there are signs of that in the market, with “sweeper” ships appearing with greater frequency at U.S. ports, carrying away nothing but empties, and box lessors reporting unheard of utilization levels of 98 percent.

“We’re trying to get every single container we can get our hands on from the factories,” said John Maccarone, president and CEO of San Francisco-based lessor Textainer.