Trump-China Trade Deal Seen Boosting Grain Container Shipments

(Bloomberg) -- A deal ending the trade spat between the U.S. and China would boost container shipments of grain, wheat and soybeans, according to the head of Japan’s largest container-shipping company.

While agricultural goods are typically transported in large volumes by bulk ships, there’s a rising trend toward using containers as they can move smaller quantities more efficiently and without the need for storage facilities, said Jeremy Nixon, chief executive officer of Ocean Network Express Pte.

“If there is a breakthrough in the tariff situation, there’s actually pent-up demand for U.S. exports to China,” Nixon said in an interview in Singapore on April 16. A more permanent pact could lead to “a return of U.S. exports on a stronger basis to China especially on agricultural products,” he said.

The U.S. and China are in negotiations to reach an agreement to end the trade war that has roiled markets and threatened global growth. The spat also led to China buying more soybeans from South America, including Brazil and Argentina.

Official Discussions

China has said it may agree to purchase an additional $30 billion of U.S. agricultural products a year as part of a possible deal being negotiated, according to people with knowledge of the plan in February. Senior U.S. and Chinese officials are scheduling more face-to-face trade talks in an effort to reach a deal by early-May, people familiar with the plans said.

Ocean Network was created in July 2017 and began services in April last year. The group was formed by combining the container-shipping operations of Japan’s three biggest shipping companies -- Nippon Yusen K.K., Mitsui O.S.K. Lines Ltd. and Kawasaki Kisen Kaisha Ltd. -- and has a fleet of more than 200 vessels.

As for a requirement for vessels worldwide to meet a stricter environmental regulation by the International Maritime Organization starting January 2020, Ocean Network plans to rely mostly on low-sulfur fuel, Nixon said. It’s also considering the installation of scrubbers -- equipment that clean exhaust gas before being released -- on five to 10 ships that are scheduled for maintenance next year.

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