Soy Group: Trade War Is Boosting Containerization
The Illinois Soybean Association thinks the trade war with China could accelerate the use of containers to ship American grains including soybeans, overseas to new and expanding markets.
According to an April 2 piece by the association’s Eric Woodie on Supply Chain Brain, Chinese buys of American soy are down by 66 percent since the tariff war began. But overall, American soy exports are down by only 18 percent compared with a year ago.
“Other countries are easing the pain of China’s actions by importing more [U.S.] soybeans,” wrote Woodie, including Mexico (up 30 percent) and Indonesia (up 16 percent).
Woodie said some of those markets favor importing soybeans in containers because they offer better moisture control and quality control. Countries like Indonesia use soybeans for products like fermented soybean cakes, for which quality control of beans is crucial.
Another reason why containerization could further open up Asian markets like Taiwan, Thailand and Malaysia to U.S. beans is that those countries don’t have extensive port facilities for handling bulk beans but do have container facilities.
“Containers are ideal for the smaller volumes sent to other Asian markets,” wrote Woodie.
Another driver for containerization is the U.S. trade imbalance with most of its trading partners, due to its booming economy. That leaves the U.S. with lots of empty containers that shippers would prefer to fill with outgoing cargoes like soybeans.