Are empty cargo containers at U.S. ports stacked with meaning?

CHESAPEAKE

MSNBC talk-show host Ed Schultz walks through a storage yard stacked high with colorful, empty shipping containers. "They came to the United States filled with goods made by foreign workers, but they're still here because we haven't filled them up and shipped them back," he says in one of several television ads shot by filmmaker Spike Lee featuring Schultz, host of "The Ed Show."

The ad could have been filmed at any other U.S. port but was shot in Chesapeake this spring. A Norfolk native who graduated from Maury High School, Schultz said returning home and using a container yard as a metaphor for what has happened to the economy offered a dramatic way to make a point.

"It just helped tell the story about this new normal that we're looking at of 10 percent unemployment," he said. "And the reason why we are is that we've shipped all the manufacturing jobs overseas."

The ad's images - walls of empty, truck-size cargo containers stacked four high - are simple and stark. The economic reality underlying those images is more complicated.

"There's some validity to it," said Tom Capozzi, vice president/global sales and customer service at Virginia International Terminals Inc., the private company that runs the Virginia Port Authority's facilities. "There's no doubt we've lost manufacturing."

Yet, despite the piles of empty containers, Hampton Roads now sends more of them overseas than it currently sees imported by the ships that call on the port.

Hampton Roads has become an "export" port, Capozzi said. Last year, 53 percent of the containers the port handled were exported.

The Heartland Corridor, a massive rail project by Norfolk Southern Corp. that opened a year ago, was heralded as a conduit for container traffic from Hampton Roads to the Ohio Valley and the Midwest.

But most of the traffic so far has been headed to the port, Capozzi said. The trains carry commodities and, in some cases, empty containers being "repositioned" for transit overseas, he said.

Because of the vessel rotation on trans-Atlantic routes, in-bound container ships tend to stop first in New York, which gets a greater share of rail-import cargo headed for places like Ohio.

Hampton Roads, often the second stop, gets more of the rail-export cargo, he said.

The validity in Schultz's argument can be found in what's in many of the exported containers.

The top commodity - by volume - shipped from the port of Hampton Roads last year was paper and paperboard, including wastepaper.

"We import all these manufactured goods and stuff and we export wastepaper and scrap metal and, you know, basically base commodities," Capozzi said.

Most of the top 10 commodities exported through the port last year weren't finished goods.

"Everybody expects that exports will boom because of the dollar being so weak," Capozzi said. "But the thing is, we don't really manufacture anything anymore, so the only thing we're really exporting is all of these commodities."

While the United States still has a trade imbalance, importing more than it exports, the "truth is right now that exports are growing very rapidly and imports are not," said Chris Koch, president of the Washington, D.C.-based World Shipping Council, which represents international container-ship companies. "To use an empty container as simply saying this is evidence of lost jobs would be a gross oversimplification."

In recent years, Hampton Roads was a drop zone for empties railed from the Midwest.

"We were actually getting a lot of empties that the steamship lines were railing from markets like Columbus, where they had a surplus of containers," Capozzi said. "They would rail them down here to Norfolk and then load them out on the vessel to reposition them to Asia."

Containers come in a variety of sizes, typically measured by length. The most common are 20 and 40 feet long, which explains why ports measure container volumes in 20-foot equivalent units.

The boxes are moved like giant Legos between ships, rail cars and trucks by cranes, oversized forklifts and towering wheeled carriers that straddle and lift them.

On any given day, there are thousands of empty containers - up to 14,000 - stacked portwide. For context, the port moved nearly 1.1 million containers last year, or nearly 3,000 a day.

They're split up among several sites, including two "empty yards" on port property, one at the north end of Norfolk International Terminals and one at Portsmouth Marine Terminal. Some empties, earmarked mostly for positioning on vessels headed for Asia, are moved back into the mix at APM Terminals and NIT, Capozzi said.

Thousands more containers can be found in Chesapeake, where a handful of yards provide storage and repair services.

The owner/vice president of one of the largest yards said there's no question Schultz is right about the decline of U.S. manufacturing, but the fact is there are fewer empty containers lying around than a few years ago, said Robert W. Foley Jr. of Mid-Atlantic Leasing Corp., which has about 75 acres in two sites that can hold about 8,000 containers.

"The inventory of containers in the United States is probably down 75 to 80 percent," Foley said. "We are down 75 percent in our storage from 2008 to now."

When the recession began in 2008, shipping lines stopped ordering new containers and many unused boxes were stashed in places like Hampton Roads to weather the storm, he said.

Over the last year, as the economy and global trade picked up, the containers began leaving his storage yards, Foley said.

"At one time, we had five yards full of them," he said. "Now we have one."

From a global perspective, Koch said, it's too simplistic to say there's a container shortage, particularly with cargo volumes falling short of projections because of lower trade volumes tied to economic sluggishness.

"There are container shortages, but they tend to be localized and seasonal," he said. "There's never going to be a shortage of equipment in L.A. or Long Beach; they've got lots of equipment there. There will be shortages in places like North Dakota."

The reason has to do with the differences in trade flows, where cargo is moving, he said.

"There's not a lot of cargo going into North Dakota, so if you're a soybean farmer in North Dakota, you have to really plan ahead and make commitments with your carrier to make sure that you're going to have the equipment you need, when you need it."

Most of the containers are owned by the shipping lines, with the remainder owned by leasing firms.

"The lines really are the ones who have an active desire to see those boxes moving, because a box sitting there isn't making them any money," Capozzi said. "It's all about repositioning these boxes from an area where they're not needed to an area where they are needed. It's an enormous expense for the steamship lines."

Homer "Butch" Crane, assistant vice president/operations and sales for K Line America Inc., the U.S. division of the global steamship line, tracks K Line's containers at the port of Hampton Roads. Managing container volumes is a kind of dance, he said.

"We try to be conscientious about not letting empties build up anywhere," he said, because wherever they do, some fee is being paid, ranging from $2 to $50 a day per container.

There's no clear-cut, one-size-fits-all explanation for the fluctuating stacks of containers at different ports, Crane said. Possible factors include the strength or weakness of the dollar, whether companies are exporting, and whether countries will buy from us.

"I talk to customers all the time who say my customer overseas can't get credit, so they can't buy," Crane said. "There are a lot of dynamics, globally, going on. It's not just that we're not making enough stuff or we don't have enough jobs."

Robert McCabe, (757) 446-2327, robert.mccabe@pilotonline.com