Container surfeit puts pressure on price

The market for shipper-owned containers – still very much the ideal solution for getting project cargoes into Africa – has slumped, according to Darren Singh, operations director of container suppliers and converters, Container World. “We wish that it was the same as this time last year,” he said, “when SA mining houses had stepped up their exploration in Africa, with new mining and drilling sites springing up all over the continent. “With the containers usually also destined to remain permanently on site – for storage or workshop purposes, for example – shipperowned units were a most costefficient answer.” This created a burgeoning market for the company in the supply of a wide range of containers – units that were vitally necessary for the movement of parts, equipment and materials to many of these rather remote sites. But demand has gone for a loop, according to Singh. “Containers are in abundant supply from various shipping lines,” he said, “but very few buyers. “The end-user market is also not purchasing containers but leasing instead.” And both these segments of the market are proving to be more chancy. Said Singh: “Here again, you are exposed to risks of bad debts, as some of these companies close and go under very quickly. This is evidence that the current economic crisis is hurting our industry as well.” The prices of containers have dropped sharply, and look likely to drop further. “That will all depend on the demand for second-hand containers,” he said. Singh described special projects as “few and far between”, with those that are in the pipeline having been placed on hold due to funding. “Not a pretty picture for the container industry,” he said, “as many are reducing prices to get a deal, and that is not helping the market.” This is hurting the smaller players as well, according to Singh. “But,” he said, “it will only be a matter of time before it picks up again.”