Used containers in high demand

In the global market for second-hand containers it has become a real fight to find supplies, according to Darren Singh, director of container suppliers and converters, Container World. “There’s a real contradiction out there,” he told FTW. “While new containers are relatively cheap and available, used units are virtually unobtainable at any price. “And as for 40-foot (12-metre) standard height containers, it’s just impossible to find them – with only high cube containers available.” This shortage has plagued the buying market for almost two years now, and, in the past few months, the situation has got even worse. “The pricing has gone through the roof,” said Singh, “and what has not helped the industry is the rand/USD exchange rate. “So, for second hand containers, supply is very poor, but is somewhat matched by a diminishing demand for purchased units. This has largely come from a lot of customers switching to leased containers, rather than buying outright at current prices.” It’s a bit of a different story in the new container market, he added. In the past four years, the supply/demand situation has rapidly fluctuated up-anddown. At the beginning of 2004 there was a serious undersupply of units, and prices soared. This persuaded a lot of new container manufacturers to enter the market – with Chinese companies (which now have about a 90% market share) dominating proceedings. “Things then swung round very quickly to oversupply,” said Singh, “and by 2005 there was a stockpile of about 750 000 unsold units – and the price of new containers dropped substantially.” But there was still a relatively sluggish demand in 2005, and it was only by the end of that year that the excess supply began to be absorbed into the market. By then, however, a lot of container charter operations had entered replacement phases, and large numbers of “super” container ships over 8 000-teu capacity began to come off the launching slips. Demand rose substantially, and by mid-2006 prices had again risen. But, after this splurge of demand was satisfied, prices eased off again towards year-end. That was the situation in 2007 and 2008 – with prices having eased off by about US$250 a unit this year. And the price downtrend was also accentuated by a new cut-price element, according to Singh. “In the new container market,” he told FTW, “full-spec standard containers were being made of 2-millimetre Corten steel. But manufacturers then started making them of sub-standard 1.6-mm steel, with inferior quality paint specifications – and prices continued downward.” But not so for second hand containers, where a ragged supplydemand ratio has kept prices rising. “This is especially true in SA,” said Singh, “where there is a serious shortage of used boxes, and prices continue rising.” And he takes a pessimistic view of the future trend. “I foresee supply becoming even more difficult,” he said.