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Shipping containers in high demand

Iowa hauls out more goods than it brings in, and we're running out of containers to hold it all. That's going to cost us

    A shipping container holding a delivery of fuel nozzles is backed into the loading dock at Apache Hose in Cedar Rapids on Tuesday, Sept. 19, 2017. (Liz Martin/The Gazette)
    Transportation
    Oct 20, 2017 at 5:00 am

    While some may consider Iowa a flyover state, there’s no arguing it’s a drive-through state.

    That’s especially true when considering the amount of freight product — $260 billion of it — that travels through the state each year.

    Locally grown corn and soybeans or manufactured products, such as tractor parts and chemicals, ship into and out of Iowa through a network of trucks, railcars, barges and airplanes. Most products head from fields and factories to freight hubs in Kansas City, Chicago and Minneapolis, and then on to the international market.

    "We’d like to have more containers that we could put our manufactured goods in and our agriculture products. There’s just so much opportunity for us to use more containers.”

    - Craig Markley

    Director of the Iowa Department of Transportation’s office of systems planning

     

    However, with a population of a little more than 3.1 million, ranking 30th in the nation, Iowans consume much less than they produce.

    “We’re a producer state, we produce things,” said Craig Markley, director of the Iowa Department of Transportation’s office of systems planning. “We aren’t bringing in product as much as we’re wanting to ship it out, so we’ve got an imbalance.”

    That imbalance has created a growing challenge among some Iowa producers and shippers — a need for ample shipping containers to efficiently transport goods to market.

    The unevenness becomes more prominent as state freight traffic continues to grow. Large-truck movement on Iowa’s primary roads has expanded by 123 percent over the past three decades, according to the Iowa DOT’s 2016 multimodal freight report.

    If trends continue, large-truck traffic will increase by more than 60 percent by 2040.

    All of Iowa’s freight shipping is likely to rise by more than 30 percent by the same year — to about 600 million tons annually.

    “We’d like to have more containers that we could put our manufactured goods in and our agriculture products,” Markley said. “There’s just so much opportunity for us to use more containers.”

     

    EMPTY CONTAINERS

    International shipping containers are hardly the only means of transporting goods — tractor trailers and grain cars can be seen on any Iowa highway or rail line. But they are an important factor in bringing freight into Iowa.

    Coming in from ocean carriers, intermodal shipping containers can be hauled by multiple modes of transportation such as river barge or semi truck.

    Those containers — typically 20 or 40 feet in length — are owned by the ocean carriers, with most of their profit coming from importing goods, explained Bruce Abbe, executive director of Midwest Shippers Association. The association promotes and facilitates the shipping and delivery of specialty grains in states that include Iowa, Minnesota, North Dakota, South Dakota and Wisconsin.

    “The short answer is, container supply is largely dictated by where the imports are, what brings the containers inland,” Abbe said.

    For ocean carriers, the top priority once an import has been delivered is to get that shipping container back to the coast. That means sometimes containers are shipped back without any product inside.

    “It’s a lost opportunity for the carrier hauling that container and an extra cost for the company trying to ship their goods or produce,” said Todd Ashby, executive director with the Des Moines Area Metropolitan Planning Organization.

    Meanwhile, Jay Byers, chief executive officer of the Greater Des Moines Partnership, said there is no shortage of producers in need of access to storage containers.

    “In addition to that, there’s just this problem of folks trying to find containers,” Byers said. “You have kind of this double mismatch in terms of people not being able to find containers and then containers that are here and they’re going back empty.”

    Riley Larson, general manager with Cedar Rapids-based JMS Transportation, said the trucking company hauls only large freight trailers — not shipping containers — but the shortage hasn’t gone unnoticed.

    With freight demand growing alongside a nationwide truck driver shortage, any impact on the industry has ripple effects, Larson said. Simply put, a shipping container shortage puts more demand on trucks.

    “We felt like we had a good grasp on it, but, all of a sudden, customers are increasing their demand to ship, and we’re looking to keep up with that,” Larson said. “That could stem from an actual shipping container shortage.”

     

    LOCATING CONTAINERS

    About three years ago, officials at the Des Moines Area Metropolitan Planning Organization (MPO) hatched an idea for creating a way to track shipping containers coming into Iowa — for producers and shippers to find containers coming into the state that could be claimed and used. The end result would increase shipping efficiency and address the issue of empty shipping containers leaving the state.

    “We knew shipping containers were coming into our market, but there was no coordination or communication as to who has them, when they were here and how they were utilized,” Byers explained. “That was what really spurred the thought of connecting the dots.”

    By partnering with CyBIZ Lab at Iowa State University, the Container Locator website was set up. Using the website, companies can track down containers, contact shippers and negotiate lower shipping rates on containers that otherwise may leave the state without any contents.

    “We’re very optimistic that that will lend itself to allow those manufacturers to be able to find those containers and be able to utilize them before they head back to the shipping companies,” Iowa DOT’s Markley said.

    “Rather than having them go back empty ... we can fill it up with something, and then it goes to the East or West Coast, or south toward the Gulf with an Iowa product in it.”

    Andrew Collings, senior planner with the Des Moines Area MPO, said it’s difficult to know exactly how many empty containers are exiting Iowa.

    However, the Des Moines group estimates between 45,000 and 50,000 containers come into Iowa each year.

    While still in beta testing, the plan is to fully launch Container Locator statewide in 2018, Des Moines Area MPO’s Ashby said.

    A patent is pending for the site, which is not only the first of its kind for Iowa but possibly the nation.

     

    A CENTRAL FREIGHT HUB

    One of the benefits of shipping containers is their ability to be transferred from one mode of transportation to another with relative ease — from a truck to a train car, for example.

    Iowa, however, is lacking options when it comes to a multimodal freight facility. Such a facility is used to ease the movement and transfer of freight.

    Outside of freight hubs in Minneapolis, Chicago and Kansas City, Iowa’s only large-scale intermodal facility is located in Council Bluffs, on the state’s western border.

    With a lack of nearby intermodal facilities, many Iowa industries face logistical challenges when shipping products.

    That oftentimes translates to more expensive shipping costs.

    But plans for a $47 million intermodal facility just outside Cedar Rapids aims to address the state’s need for a more centrally located freight hub. Federal funds will cover more than half that cost, with private investments making up the remainder.

    "You have kind of this double mismatch in terms of people not being able to find containers and then containers that are here and they’re going back empty.”

    - Jay Byers

    CEO of the Greater Des Moines Partnership

     

    With nearby access to truck routes such as Interstate 80 as well as rail lines that include Cedar Rapids and Iowa City Railway, or CRANDIC, and Union Pacific, the facility would incorporate three components: intermodal facilities for transfer of truck to rail freight, and vice versa; a cross-docking facility for truck-to-truck transfers; and a bulk freight storage and transfer operation.

    Officials hope to have the facility up and running by early 2019.

    The Iowa DOT’s Markley said the hope is such a facility not only provides Iowa with a more central freight hub, but also provides a staging location for shipping containers, possibly ensuring more of them leave the state full of Iowa goods. Such an offering has economic development implications, he added.

    “If it does provide a cost savings for manufacturers to be able to ship their product, that certainly lowers costs for that business, it makes them more competitive, it hopefully keeps them in Iowa if they’re an existing business or it attracts them to Iowa,” Markley said.

    “If we can save that business on their logistics cost, their shipping costs, that’s a 24/7, 365 savings.

    “That helps them every day of every year that they’re in Iowa. If we can provide them with logistics solutions to help lower their bottom line, that’s a great thing for Iowa.”

    l Comments: (319) 339-3175; mitchell.schmidt@thegazette.com

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