Rising container freight rates curdles U.S. milk exports
An increasingly common complaint of shippers lately has been availability and pricing for export containers. Many lanes, in particular those to the Far East, have risen dramatically by as much as 300 percent over the past three years, and finding sufficient empty containers is also problematic. Recent quotes for TEU (twenty-foot equivalent unit) containers have been upward of $15,000.
As freight becomes increasingly expensive, its share of the total delivered cost rises and becomes a more dominant factor in making purchasing decisions. A good case study would be exports of dairy products from the U.S to China and other Far East countries. These exports had been growing over the past several decades as demand increased.
However, the U.S. has always competed for these markets with other sophisticated global dairy exporters such as Western Europe and Oceania (Australia and New Zealand). As containerized freight rates rise, there is a natural advantage that shippers closer to Southeast Asia enjoy. New Zealand, for example, benefits from shorter shipping supply chains and cheaper costs, which should help them drive a strategic pricing advantage over U.S. exporters.
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