Demand for 6m containers outstrips supply

In the refrigerated container (reefer) market the demand and supply are badly out of balance, according to Darren Singh, operations director of SA container conversion and supply major, Container World. “There is a huge demand for 20-foot (6-metre) reefer containers,” he told FTW, “but consistent supply has been, and still is, a major problem. “The only way you can get 20-ft reefer containers is to purchase them brand new. But the factories – about 95% of which are based in China – are currently still running full-to-capacity supplying the massive post-recession demand.” This, Singh added, means that any customers requiring only one or two boxes are often forced to make alternate plans. One Container World answer to this problem is to try to persuade customers to take 40-ft (12-m) units. But this is a bit of a plus-minus solution, Singh added. “There has suddenly been a good supply of these bigger units,” he said. “But the converse has been that prices have been prostituted – as the demand was also high – and it has been the highest bidder who gets the containers.” A distortion in the local market has been that SA-based suppliers have been taking advantage of these high prices, and begun to put non-operational units out into the market. “The problem with this,” Singh added, “is that we have to repair them – at a cost – before we can either sell or lease them.” The demand for reefer containers right throughout the whole African market is still high. But there is a big problem in these overborder countries with the frequent inconsistency in the power supply. “This can cause huge problems for the clients,” said Singh. “Power surges cause printed circuit (PC) boards to blow up, destroys the contactors and so on. “To help overcome this problem, we have been offering client units which are fitted with power-surge devices to control the power.” The trend in the container market is that more and more companies are opting to lease. “This,” said Singh, “because this option does not affect their capital expenditure (capex). And, should anything go wrong with the container, we will repair this at no charge to the client – provided there was no negligence or abuse of the unit.” And although the end of the World Cup has put a number of reefer containers – which had been leased to events companies at the various stadiums – on to the market, this must be seen as only a temporary glut, according to Singh. “This sudden supply has definitely caused a short-term price war,” he told FTW. “But my prediction is that, if the market remains very active, we will continue to see an increase in demand, with supply once again becoming the problem.”