‘Container shortage will continue beyond 2011’

There is a serious shortage of both new and used containers, a shortage likely to continue through 2011 and onwards, according to Christopher Lee, MD of SA’s major supplier and converter, Container World. This under-supply, he told FTW, was mainly because the world’s two top container producers – China’s CIMC and Singamas, which produce 80-90% of the world supply – almost completely stopped production during the 2009 global downturn, operating with skeleton staffs and whatever plants were still running just ticking over. “The production dropped about 90% from 2007/08 to 2009,” he said, “and world supply could be counted in thousands, not millions. “As world trade slumped, container lease companies and shipping lines just stopped buying, with ships being laid up and container demand plummeting.” Container World operates on the fringes of the mainstream container industry, so equally suffered from the container short supply. “The container industry is primarily for carrying goods around the world, so the users were saying: Why order more containers if we don’t need them? That left a shortage of used boxes, as users refurbished boxes past their prime, and kept using them for cargo movement.” But there were definite signs of a change at the end of 2009 and into 2010, with trade and box demand picking up. But recovery in the container plants was slow. “As the orders started to come in, it was hard for the manufacturers to find people to man their plants,” said Lee. “The general Chinese economy had also started booming, and many skilled staff had meantime moved into other industries. “It was therefore slow in 2010, as the big box producers struggled to train up new staff to run their assembly lines.” And, although these manufacturers are now running at full tilt, and working double shift, a shortage has already been generated, and observers are predicting that it’s going to last right throughout this year. The Paris-based shipping data producers, Alphaliner, have produced startling stats to support this prediction. “The container shortage will continue beyond 2011 due to a lag in container manufacturing to match the growth in slot capacity,” said the report. “The box-inventory-tovessel- capacity ratio will fall to 1.99 by the end of the year, from the 2.03 in 2010 – marking the lowest level on record, and in comparison to the 2.99 containers per slot in 2000.” Alphaliner also forecast that the container production capacity this year would be about 3.5-million TEUs, which is well below the highest production level of about 4.3m. So, although things are now going “at a pretty good clip”, according to Lee, there is still a shortage, and, given this demand/supply imbalance, prices are rising. “A new container costs about 50% more than two or three years ago,” he said, “with a TEU up from about US$2 000 to US$3 000, and showing no signs of going down.” As the availability of used boxes is entirely dependent on the available supply of new containers, there’s also a shortage for the secondary container industry in which Container World fits.