February 2, 2009

  
A sharp decline in freight rates have sparked changes in how US grains are shipped to overseas buyers.

Last year, the shipping costs of distiller's dried grains with solubles (DDGS) from the US to Asian countries ranged US$130-140 per tonne for bulk freight. Prices have since dropped to US$23 per tonne due to the world economic crisis, resulting in importing countries to shift to buying grains by bulk rather than by containers.

Prices now favour bulk shipments, said Mike Callahan, US Grains Council (USGC) senior director of international operations for Asia.

Callahan said containers were mainly used as a shipping method last year, but the current market situation has made countries turning back to shipping in bulk.

USGC director in Southeast Asia, Adel Yusupov, said containers were not a common shipping method until recently.

Yusupov said, "Containerisation of agricultural trade between the US and Asia started about five years ago, when we saw an influx of Chinese-made exports of manufactured goods, mainly flowing in containers. The return freight from the US to China was offered by shippers at discounted levels, compared to bulk freight rates, so as a result we saw an increase in containerised exports of agricultural commodities."

Depreciation of the US dollar also spurred US exports, putting containers in high demand which pushed up container freight rates. As a result, container rates began to hold steady above the bulk rates in the last few months, according to Yusupov.

The shift in freight costs has also encouraged a change in grain storage in many countries, including Japan, the largest US feed grain buyer.