Global container shortage persists

Prices double in just over a year ALAN PEAT THE RAPIDLY rising price of steel has had a big impact on both the new and second-hand container markets, according to major users. “There is still a global shortage of containers,” said Dave Rennie, CEO of Ocean Africa Container Line (OACL) and chairman of the Container Liner Operators' Forum (Clof). “They are also selling at about US$2 500 (R15 000) per TEU, a price impacted by big demand and the fairly substantial prices for steel – this latter factor also affecting the price of newbuild ships.” Christopher Lee, MD of container supply and conversion company, Container World, agreed. The main driving force is particularly strong economic growth since 2003 in India and China, he told FTW, with the latter having an almost insatiable demand for steel and steel-making materials to support its booming economy. By the end of 2003, container manufacturers were running out of steel, according to Lee, and were pushing up prices because the demand still remained strong. “The Chinese, for example, with about 70% of the market the biggest manufacturers of containers, hiked their prices by 40%-50% in just weeks. “In just over a year, global prices nearly doubled – with containers currently between 60% and 70% more expensive than at the start of 2004.” This has been complicated by a lot of new orders for containerships in the books of the shipbuilders around the world – with a particular emphasis on the high container-capacity very large containerships (VLCSs) needed to serve the burgeoning seafreight trade on the world’s main trade routes. “For most of the last year,” said Lee, “the market has been undersupplied with both 20-foot (6-metre) and 40-ft (12-m) containers. But demand remained strong, and the supply has barely been able to service that need.” “It’s a similar story for refrigerated containers (reefers), with a strong demand and supply just adequate.” The prices are still rising, he added, but seem to be beginning to level out. Rennie finds it difficult to forecast what the prices are going to do. “But, as long as demand for ships and containers continues as currently, there will be a tightness in the supply/demand balance. “It looks like it may come into equilibrium next year, but I think things are still going to be tough for the next two years.”