The intermodal shipping container has played a pivotal role in the creation of the global economy, though its contribution is probably overlooked by the general population. The book The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, by economist Marc Levinson, attempts to give the container its due, but most scrap processors are already aware of the opportunities the modest intermodal container has afforded to their businesses.
Paper, plastics and nonferrous metals have long been shipped to export markets via container, but increasing volumes of ferrous scrap have been traveling overseas tucked away in intermodal containers. For some scrap recyclers, intermodal containers are the only means by which they can access the export market, either by virtue of their size or their inland locations. For others, containers represent a more affordable option than breakbulk shipping, even though they have the tonnage and port access to enable such shipments.
GROWTH TRENDSNiels Erich, spokesman for the Westbound Transpacific Stabilization Agreement (WTSA), a group of 10 ocean container shipping lines with routes between the United States and Asia, offers statistics that bear out the increase in containerized metal shipments. In 2004, metal scrap shipments from the U.S. to Asia totaled 249,620 20-foot container equivalents (TEU). The number of shipments grew to 323,927 TEU in 2005 and to 365,550 TEU in 2006, Erich says. "The increase in 2006 over 2005 was 12.8 percent. Over 2004-2006, metal scrap grew from 6.4 percent of the total U.S.-Asia container freight market to 8 percent," he adds.
For the first six months of 2007, the figures show another considerable increase in containerized scrap metal shipments. "In the first half [of] 2007, containerized metal scrap exports to Asia grew by 33.8 percent to 232,150 TEU versus 173,486 TEU for the first half of 2006," he says, accounting for 9.1 percent of the total U.S.-Asia container market for the period.
When it comes to ferrous scrap metal in particular, a number of recyclers admit to shipping more material via container to Asian markets.
OUTWARD BOUNDFrank Goulding, vice president of marketing for Newell Recycling, Atlanta, says Newell has been shipping ferrous material via container since early in 2007. The company’s export container volume increased exponentially in October before tapering off somewhat in November and December, he says. He attributes this decline to domestic prices for material catching up with export prices. Container availability was also tighter toward the end of the year, and rates had also increased by 15 percent to 20 percent, he adds.
Rick Gertler of Scrap Metal Services LLC, Burnham, Ill., says many recyclers
EASY DOES IT |
A-Ward Attachments, based in New Zealand, has introduced two models of its Container Tilter to help scrap processors more easily load intermodal containers for the export market. According to Rich Currie, North American sales director for A-Ward Attachments, the company noticed the need for such a product three years ago when visiting a customer that was using a skid steer to load HMS into containers. In response, A-Ward created a Container Tilter that enables a container to be off-loaded from a truck and tilted from zero to 90 degrees (for 20-foot containers) or zero to 45 degrees (for 20-foot and 40-foot containers) and loaded with a standard material handler or crane. Currie says most of A-Ward’s customers are using Container Tilters to load ferrous scrap, including HMS, busheling, shredded steel, electric motors and stainless steel. A-Ward has sold more than 60 units to roughly 40 customers in North America. |
Goulding and Gertler both find that the most common grades of ferrous scrap exported via container are No. 1 heavy melt, plate and structural steel and shredded material. Goulding says mixed one and two are sometimes exported via container, though it is often difficult to get sufficient density.
"There may be some ‘off grade’ ferrous grades also being exported as well," Gertler adds.
Most of the ferrous scrap shipped from the East Coast by intermodal container is going to India or Bangladesh, Goulding says. However, he says, little material goes from the East Coast to Taiwan or China, as the expense is generally too high.
Goulding says Indian consumers are asking for TEU shipments of ferrous scrap because they are unable to consume a 40,000-ton cargo individually, and instead must divide the material up among the small foundries and steel mills in the country. "What this has allowed the small mills and foundries to do is buy direct and cut out the middle man," he adds.
Despite the increasing use of containers for the shipment of ferrous scrap, it is not yet a widespread trend in all regions of the United States.
EXPLORING OPTIONSSam Jacobs of Columbus Metal Industries, Columbus, Neb., says he’s not aware of many recyclers in his area that are shipping ferrous scrap via intermodal container, though his company ships nonferrous material that way. He attributes the lack of intermodal ferrous shipments to the scarcity of rail ramps in the state.
Jacobs says loading five 40,000-ton containers is also more challenging than loading 200,000 tons of material to be shipped to a domestic consumer.
However, Jacobs says he sees exporting shipments of ferrous scrap via container as "another avenue to keep current domestic markets where they need to be," in terms of pricing.
Pricing is not the only factor that determines whether processors ship ferrous scrap to overseas consumers.
"When we look at price points [for] exporting various grades of scrap, we analyze costs associated with the logistics and loading compared to local consumer price points," Gertler says. "As we all know, the best price is not necessarily the best solution when selling (export) scrap. We also must take into account that we take care of and support the consumers that have been there for us in every market, every month, prior to looking at an export deal," he adds.
Goulding says Newell considers many of the same factors before deciding whether to sell material to overseas consumers. "Generally speaking, we ship everything we can into the domestic market," he says. "What we sell export is what our consumers don’t want. I think that holds true for a lot of what you call your tier-one processors."
He continues, "It’s not all about money; there are relationships here that are many years old and so they are highly valued."
BROADER HORIZONS"In my Midwestern opinion, the only advantages that I see to shipping ferrous via containers are all price related," Scrap Metal Services’ Gertler says. "We do not want to ship containers (versus other modes) and lose money."
He adds that at ports on the East and West coasts and in the South, various transportation issues, such as a lack of rail cars, barges and trucks, make the container option more inviting.
"Over the years, we’ve looked at scrap flowing regionally due to transportation costs and consumer demand," Gertler says. "Through the consolidation witnessed over the past five to seven years, it is quite apparent that we are now witnessing a greater global market place and trading."
He says logistics and the exchange rate also factor in.
"I believe that as long as the export market is stronger than the domestic market and container rates will remain at a lower cost relative to bulk cargo rates, we will see this activity continue," Goulding says of shipper ferrous scrap via intermodal container.
The author is managing editor of Recycling Today and can be contacted at dtoto@gie.net.
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