Containers of U S grain are sign of China trade

MAPLE PARK, Illinois, Dec 26 (Reuters) Jeff Grzya takes a sheet of cardboard and a few planks of wood and in five minutes he's turned an empty 40-foot shipping container into a box for grain.

''It gets easier the more containers we load,'' said Grzya, 45, who manages ''everything coming in or out'' of Elburn Cooperative Co.'s grain facility 92 km west of Chicago.

Like other grain handlers in the U S Midwest, Elburn Coop is taking advantage of a new resource in the flood of imports to the United States from China: empty shipping containers.

The containers come from China by ship loaded with everything from television sets to textiles, then cross the United States by rail or truck. They come to Elburn Coop empty and leave the facility filled with grain via truck or train.

As U S imports have soared -- above all from China -- tens of thousands of shipping containers a year were returning to Asia empty or were just being scrapped.

''We've had up to 30 containers a day in the past few weeks, so I've had no shortage of practice,'' Grzya said, as he built a wooden bulkhead and poured 23 tons of soybeans into an empty container.

The usual shipping method for grain is in bulk freighters, but ocean shipping rates for U S grains are at high levels this year, giving a boost for cheaper container shipments.

''Containers give me a fresh shipping option and provide competition on pricing,'' said farmer Kent Kleckner, who grows corn and soybeans on some 4,400 acres, with much of that land near the Elburn Coop facility.

Shippers say containers are a low-cost alternative which also boosts revenue for U S railroads, but that the market is still highly dependent on bulk shipping rates.

''This market is very sensitive to (bulk) rates,'' said Bo DeLong, head of the grain division at Clinton, Wisconsin-based grain transport company DeLong Co. ''When rates go down, container shipments tail off significantly.'' In Wisconsin, DeLong uses Canadian National Railway Co. and Canadian Pacific Railway for containerized grain shipments, and U S railroads Union Pacific Corp. and Burlington Northern Santa Fe Corp.

in Illinois.

GRAIN FOR CONSUMER GOODS Although containerized grain shipments have been around since the 1980s, shippers say the market took off as U S manufacturing shifted overseas and imports from China soared.

''We have seen a dramatic increase in containers over the past three years,'' said Greg Lickteig, senior group manager at Omaha-based grain shipper Scoular Co. ''It reflects the fundamental imbalance in trade between us and China.'' ''Apparently the only thing we've got to send back to China is corn, soy beans and distillers dried grain,'' he added.

According to a December 14 U S Department of Agriculture report, monthly containerized grain shipments to Asia were up 44 per cent in September from a year earlier and 110 per cent above the three-year average.

During 2005, 5 per cent of grain exports to Asia and 4 per cent of all grain exports went in containers, up from 3 per cent and 2 per cent respectively, according to USDA data.

Based on conversations with shippers and Asian importers, the port of Portland in Oregon ''expects containerized grain volumes will be a growing part of our export business,'' said spokesman Eric Hedaa.

Although demand for containers fluctuates with bulk shipping rates -- called Panamax rates after the Panamax bulk ships that can haul 55,000 tons of grain -- shippers say some U.S. farmers want to deal directly with Chinese customers.

''Containers enable farmers to contract with the end user and eliminates the need for a middleman,'' said Bob Zelenka, the Minnesota Grain&Feed Association's executive director. ''They can even load containers on their farms and save money.'' Using containers instead of bulk shipments can also protect grain from damage, he added.

GIPSA spokeswoman Amanda Taylor said farmers using containers also want to ''ship a specific product and not part of a bulk shipment'' that has been mixed with other grain.

Regardless of the advantages containers provide, DeLong's Bo DeLong predicts ''this market will remain volatile.'' ''Yes, containers provide higher quality,'' he said. ''But if bulk rates are competitive, most shippers prefer a 55,000 ton Panamax to 2,400 containers.'' ''Bulk shipping is a lot more convenient and involves a lot less paperwork,'' he added.

Reuters DKA DB0852