Suppliers battle to keep up with burgeoning container demand

SA lines also feel the pinch
ALAN PEAT
THERE IS a forecast shortage of containers on the world’s busiest sea highway between the Far East and Europe, as the volatile container market moves rapidly from oversupply to undersupply in the space of weeks. The whole world market for both 20-foot (6-metre) and 40-ft (12-m) boxes is becoming tighter, according to the SA agents for a Far East shipping line, and the bustling orient-occident route is a good primary barometer of the expected overall shortage. Indeed, said Christopher Lee, MD of Container World, the suppliers’ market – of which over 70% is in China – is working flat-out to keep up with burgeoning recent orders, and is currently not quoting prices beyond August. A good indication of the continuing upward pressure on prices there has been evident since about March this year. Lines on the SA route are certainly looking for containers, according to Andrew Weiss, head of the marketing team at Mitsui OSK Line (MOL). “We’re very tight on boxes,” he told FTW, “and having a lot of new buildings ordered.” A shortage of container steel, he added, is not helping the supply situation. It’s been another complete turnaround in this sensitive supply-demand market, Lee added. Into the first part of this year, there was a tidy over-supply, and the pressure on prices eased. But then, in March, a lot of big container charter outfits decided to buy, and there was a significant rise in the demand for new units. “The over-supply dropped in a few weeks to under-supply,” Lee told FTW, “and the prices shot up again. “The price over a couple of weeks went up by about US$500 a container – about a 25%-30% increase. You could hardly get a container from April to August, and the factories were going flat-out again.” With the overall growth in the market, it can be expected that the volatility will continue, according to Weiss. This is not necessarily a short-term situation, Weiss added, expecting container equipment to be under pressure for some time. Lee also said that he hoped that everyone was looking forward to a good Christmas, as this was another major factor in container supply-demand. “It’s just about now,” he said, “that a lot of shipments from the Far East start to move, as the pre-Christmas rush gets under way. “That alone makes it buying time for containers at the moment.”