Ocean exporters: Looking for equipment and space? Pray that imports recover.

That seems to be the message from Ron Widdows, CEO of APL, to U.S. exporters. This article was originally in last week’s edition of the Journal of Commerce and reprinted at the JOC’s sister publication/web site, Shipping Digest, yesterday. Even though I currently work for an importer my previous experience was in both imports and exports. About a month ago, out of curiosity, I posed the same question to one of my key contacts at one of the container lines. There’s a number of factors involved, which this article touches on nicely:

1) Trans-Pacific vessel capacity, like it or not, is driven by imports, not exports. With imports down and container lines not making money on the Trans-Pacific lanes, that means fewer or smaller vessels calling on the U.S. market which means less space for exports going back to Asia.

2) The focus on imports by the carriers means they concentrate infrastructure and services accordingly. Many of the exports are coming from areas that don’t have the corresponding import traffic so the carriers don’t have the equipment or services in place to handle the upswings in export volume.

3) Import containers are turned quickly as product is needed by customers and to be stocked on store shelves. Export containers often consist of general commodities and raw materials, where the buyer in Asia may not need the product immediately and takes their time in receiving and turning the container around.

4) Overall export containers weigh more than imports. This means a fully laden vessel of export containers would not be able to carry as many containers as a vessel full of imports.

5) Despite the increase in export rates, they are still far below import rates, so until there is greater parity or import volumes creep up, there is not a whole lot of incentive for the carriers to position capacity for the export market.

Another factor that I was not aware of is that exports are often destined to off-line locations serviced by smaller feeder vessels:

China continues to dominate U.S. imports from Asia, but the fastest growth in U.S. exports is to India, Indonesia and Southeast Asian points, many served by regional feeders instead of line-haul vessels. “The boxes are going to places other than where the load generation is growing the most, and they’re going to places that are more expensive to serve,” Widdows said.

These are all good explanations as to why exporters should hope for a rebound in the import market and why carriers are having difficulty providing capacity to exporters. But it all points down to the same important factor: The carriers have traditionally focused on the import market and tailored themselves accordingly while ignoring or paying little attention to the needs of the export market.

The key quote from this article, in my opinion:

He (Paul Bingham, principal at consulting firm Global Insight) said the current conundrum, for carriers and cargo interests, may be that they’re simply in unfamiliar territory. It’s been 20 years since exports exceeded imports in the trans-Pacific trade. “I think that in some cases, carriers are just so used to dealing with the import sector that they’re almost not prepared from an attitude perspective to handle some of the opportunities that may arise on the export side,” Bingham said.

Italicized text included by us for ease of reference.