The boom in U.S. exports has hit two speed bumps: scarcities of cargo containers and not enough room on ships for all the truck-size metal boxes headed abroad.
It's a problem that is pinching businesses both in Hampton Roads and across the country. And it is dampening one of the few bright spots in a stagnant U.S. economy, as a weak dollar makes U.S. goods cheaper to buy overseas.
"We could work right now 24 hours a day if we could get the containers," said Noel Smith, general manager of Arreff Terminals Inc., a Portsmouth company that packages animal feed into containers bound for the Middle East and Asia.
Instead, Smith has cut his work force slightly and is running his operation eight to 10 hours a day. He says he has the business to fill about 1,000 containers a month, but he's only able to secure about 600.
As evidenced by the hundreds of metal boxes trucked over Hampton Roads highways each day, there are still plenty of cargo containers here. But with more companies wanting to export, competition to get the containers - typically owned by shipping lines - is keen.
Also, there's frequently a logistical challenge. Many exporters are in the Midwest, and the containers frequently don't venture far from ports. Some shipping lines that used to pay for the cost of moving empty containers inland no longer do so amid rising railroad rates.
Such a container shortage hasn't occurred in at least 30 years, said Philip Damas, a director of Drewry Supply Chain Advisors in London. "The crazy thing is that nobody forecast this would happen."
Exporters are also scrambling to find space aboard ships. Previously, container slots were reserved on a week-to-week basis, said Daniel Secondi, who handles international shipments for a subsidiary of Perdue Inc., the food and agricultural company that exports soybean meal and other products from its Chesapeake terminal.
Now, Perdue has to book vessel space about six weeks in advance, he said.
"If somebody says, 'I want to buy something in May, there's no way I can sell it because I cannot ship it,'" Secondi said in late April.
Several factors are exacerbating the problem:
Reduced capacity. Container lines are shifting vessels that had been plying the waters between Asia and the United States to more profitable routes between Asia and Europe, Damas said.
Also, export containers, frequently loaded with paper, lumber, logs and scrap metal, tend to be heavier than import containers, which arrive full of clothes, electronics and other consumer goods. That causes vessels to reach their maximum weights with fewer export containers, said Thomas D. Capozzi, the Virginia Port Authority's senior managing director of marketing.
More cargo choices. Shipping lines, knowing they will have full ships leaving the United States, are now able to pick among the export freight to get the highest rates. Before, commodities like paper and scrap metal could get cheap rates and easy access to vessel space, Capozzi explained. Now, that type of freight is being squeezed out by higher-paying cargo such as machinery and other finished goods.
Additionally, higher charter rates for bulk cargo ships have resulted in increased quantities of grain being exported in containers, reducing space for other cargo.
Bay Bridge Enterprises LLC, a Chesapeake company that exports scrap metal to such countries as India, Taiwan and Indonesia, is able to procure only about 200 containers a month from shipping lines. Until last fall, it was able to get 1,000 containers a month.
"The situation is getting worse and worse," said Shailesh Vyas, Bay Bridge's president.
Higher prices. The demand for exporting freight by containers is also driving up those rates; an increase of 20 to 30 percent is expected this year, after being "pretty stable" for the past several, Damas said.
The boom in U.S. exports is reflected in Hampton Roads' figures. Between 2003 and 2007, for instance, shipments increased 51 percent, according to the Port Import Export Reporting Service, a research firm.
"We are working hard to improve equipment availability where it makes economic sense on a round-trip basis," said Mary Ann Kotlarich, a spokeswoman for Maersk Line, the world's largest container line. "The volumes and cargo density in each direction must allow us to provide transportation at reasonable rates and make a reasonable profit."
It's difficult to say when conditions for exporters will improve. An increase in the dollar's value would curb the flow of exports, providing some relief, shipping officials say.
Also, negotiations to renew major shipping line contracts from Asia to the United States are under way; if the ocean carriers can get higher rates, they may bring more ships back to U.S. service, Damas said.
Gregory Richards, (757) 446-2599, gregory.richards@pilotonline.com