Container market eases after 2011 shortage

The global container market has eased from the serious shortage of both new and used containers last year, and prices have dropped after hitting highs during 2011’s supply/ demand imbalance, according to Christopher Lee, MD of supplier and converter, Container World. Lee noted that the market demand in 2011 was strong until about mid-year, but then, he said: “The lights went out. “As world trade slumped, container lease companies and shipping lines just stopped buying, with container demand plummeting.” The lines were also under great pressure on their freight rates, and one answer to this, according to Lee, was for the lines to tighten up on their existing container fleets. “Because new container prices were moving so strongly last year, the lines tended to look at continuing to use five-year-old containers rather than replacing them with new.” All this rapidly diminishing demand once again saw a lot of plants in China more or less being mothballed, and prices once again took a downward turn. “They have since dropped from last year’s peak of US$3 000 a unit to about US$2 500 now,” said Lee. “And, at about US$2 400, the manufacturers are just breaking even, so manufacturing is still subdued.” The exception to this demand slump, he added, was in reefers (refrigerated containers). Demand there stayed strong, and their prices remained firm. On second-hand containers, the supply has improved. “Not a massive amount better, but better,” Lee added. And the serious shortages and high prices of last year have eased because this supply/demand ratio in the market has improved. “Prices are probably still a bit higher than this time last year,” said Lee. “But they peaked in the 3rd quarter of 2011, and then slipped back a lot.”