Roughly seven million cargo containers enter the U.S. annually, packed with products to feed American consumers' ravenous appetite for cheap goods. Then most of the big steel boxes head back overseas empty.

U.S. grain companies have figured out that's a lost opportunity for American grain to reach foreign markets. Although the total number is still small, a growing number of cargo containers are being shipped back, primarily to China, loaded with U.S. corn and soybeans.

Not only is it an additional market for farmers, it's a market that pays a premium. For farmers selling to the Elburn Cooperative Company, headquartered in Sycamore, IL, the premium can be as much as $0.15/bu. for corn and $0.20/bu. for soybeans.

It has been a fast-growing market for the co-op. In 2005 the company didn't load a single cargo container. But in 2007 the company shipped a third of its corn and nearly 80% of its soybeans via container.

Extra time and effort

The company loads 20- and 40-ft. cargo containers with 48,000 lbs. of corn and 53,000 lbs. of soybeans. Because the cargo containers may sit on a dock for up to three weeks during transit, corn moisture must be 14.5% or less, soybeans 13% or less.

Cargo containers take extra time and effort to load, according to Phil Farrell, grain merchandiser manager at Elburn Cooperative. “It creates extra issues,” he says. Before cargo containers can be loaded with corn or soybeans, workers have to build a temporary bulkhead in the back with ¼-in. corrugated cardboard and 2×6 lumber to hold it in place.

“It takes about seven minutes to load a container,” Farrell says. The co-op built a cart with a horizontal auger that rolls under the surge tank of its truck load-out shed. Trucks back up until the auger is deep inside the container and then slowly pull forward to distribute the load. Once the container is loaded, the co-op delivers it to a nearby intermodal facility, a train yard devoted to container shipment, at Rochelle or Elwood, IL.

“In the fall when there's a premium on trucks, we don't deliver to that market,” Farrell says. “It's a slow process that we can't afford to deal with during the harvest peak. We haven't made additional investment in a faster-loading system yet like some country elevators have.”

Each container is viewed as an individual export vehicle, according to Farrell. That means it involves just as much paperwork as a Panamax ship, which is built specifically for the maximum dimensions that will fit through the locks of the Panama Canal.

Two USDA-approved inspectors must be on site during container loading to inspect grain quality and verify scale weights.

Bulk vs. container shipment

The Elburn Cooperative markets its containerized grain to the DeLong Company, Clinton, WI. DeLong contracts cargo containers from shipping companies to export commercial corn and soybeans to Southeast Asia.

“We've used containers since the early 1990s to ship value-added soybeans to Japan,” says Brandon Bickham, one of DeLong's export sales managers. “We started loading containers with commercial corn, soybeans and feedstuffs about four years ago. Before that, we didn't export any of our commercial grain.

“Now, at least 90% of the corn and soybeans we sell is containerized, shipped via rail to the West Coast and then loaded onto cargo ships headed to Southeast Asia,” Bickham continues. “Roughly 80% of the grain goes to Taiwan.”

The difference between bulk ocean freight rates and cargo container freight rates has been a driving force in the demand for containerized grain, according to Bickham. “Traditionally, bulk ocean freight rates have been $25 to $40 per metric ton,” he says. “But with increased international demand for bulk products, bulk freight rates are at an all-time high of more than $100 per metric ton, while cargo container rates are closer to $65 to $75 per metric ton.”

New overseas markets have opened up since more grain is shipped in containers. “The container markets serve the smaller customer well,” Bickham says. “Rather than partnering with other buyers to purchase an entire ship of grain, companies can buy just the grain they need, when they need it.”

The Chicago area favors cargo container grain shipping because it's a major distribution center for the central U.S., and both the Union Pacific and Burlington Northern/Santa Fe railroads have built huge intermodal yards close by. But it's not the only place where containers leave loaded with grain.

Elburn's Farrell says, “Any urban market that has access to containers has the market for shipping grain.”