No end yet to global container shortage

The international shipping industry is already short of containers as buyers reject the high prices, and the repercussion is a major shortage of second-hand boxes in that section of the container industry, according to Christopher Lee, MD of SA’s major supplier and convertor, Container World. And the global shortage of containers is likely to continue until the end of this year, according to Drewry Maritime Research – although not at the critical levels of last year, as the Chinese manufacturing giants tried to get restarted after their 2009 shut-down during the trade crisis. The dominant Chinese container industry was restricted to operating at half its maximum twinshift potential throughout 2010, largely because of problems associated with restarting factory lines – and particularly rehiring labour – after more than a year of idleness. This has constrained the availability of new boxes. But, at the same time, the high prices this year have been a restriction on the demand from the shipping industry. And, if the container manufacturing sector controls its output, it will likely result in even higher new container prices. The forecast is also that material and production costs are set to continue to rise, and will act as a further inflationary stimulus. “The global shipping industry has been financially struggling, with extra capacity on the market, and low rates the result,” Lee told FTW. “Therefore, the shipping lines and leasing companies have been thinking carefully about buying new containers.” Drewry’s latest container census report agreed, noting that continued high container prices deterred new investment. “Particularly,” said Drewry analyst, Andrew Foxcroft, “from cash-strapped shipping lines which have found it harder to secure financing in recent years.” He also expects that the availability of containers will continue to be tight during the forthcoming peak season. The unfortunate result of this reluctance in the shipping and leasing industries to buy new, high-priced containers is that the second-hand market has been in a continuing state of very short supply. “This,” said Lee, “has been particularly true of 40-foot (12-metre) containers (the size most used on the major trades). In SA, and internationally, the 20-ft (6-m) have been a little better, but still tight. “Shipping lines are just not disposing of used containers at the rate we’d like to see.” His prediction is that this will last to the end of the year, and that the prices of second-hand boxes will still be at a peak.