Abstract

The rise of containerization has revolutionized and expanded the modern globalized intermodal transport systems. While white sugar, being a relatively low value cargo (compared to retail/manufactured goods), has been historically restricted to being shipped in break-bulk vessels, there is now evidence of increasing containerization arising within some white sugar export markets in the last decade.

This study suggests that developments in the seaborne freight industry, particularly a trend of increasing break-bulk vessel size, lower container freight rates and increased availability of international container shipping routes, have accelerated a shift towards shipping white sugar in containers. These developments were aided by a series of other advantages inherent to the container trade, such as: expedited shipping; smaller trade unit sizes, which not only increases the flexibility of trades, but also reduces barriers to entry, allowing smaller producers and buyers to participate in the market; reduced risks of damage and pilfering; minimized weather-related delays; and fewer credit risks involved from the buyer’s perspective.

Major white sugar exporters such as Brazil, India and Thailand have increased containerized sugar exports both in absolute terms, as well as in the share of total white sugar exports since 2007. After an impressive start, Guatemala has been an outlier, with containerized sugar exports remaining stable over the same period. When combined, these four major white sugar exporters account for around half of the world’s white sugar exports. The combination of these four exporters also yields a threefold increase in the share of containerized sugar exports, from around 20% of total white sugar exports in 2007 to nearly 60% in 2016.

For now, while both containers and break-bulk transport systems have a role to play, the former is increasingly substituting the latter. It remains to be seen how far containerization in the white sugar export sector will go.

Contents:

INTRODUCTION	

1	SUGAR TRADE AND TRANSPORTATION	
        1.1	Sugar and global seaborne trade	
        1.2	Freight rates and vessel supply & demand	

2	CONTAINERS	
        2.1	A brief history of container trade	
        2.2	Global container seaborne trade	
        2.3	Recent Port developments	
        2.4	Sugar and Containers	

3	CONTAINERS AND WHITE SUGAR EXPORTS	
        3.1	Brazil	
        3.2	Guatemala	
        3.3	India	
        3.4	Thailand	
        3.5	Sum of the four exporters	
        3.6	The Intercontinental Exchange’s Containerized Sugar Contract	

4	GENERAL OBSERVATIONS AND CONCLUSIONS