Ocean Cargo: Containers and other equipment may be in short supply
July 18, 2011
After the critical shortages of containers of last year, production has picked up again, but high container prices and a tight ratio of containers to vessel slots will continue to constrain the availability of boxes.
According to the Container Census – Annual Survey and Forecast of Global Container Units, a new report from Drewry Maritime Research, shippers have another reason to be concerned.
At the end of 2010, the global fleet of containers exceeded $90 billion in replacement value for the first time, according to the report, also reflecting the increased unit prices of containers.??
?“If capacity is more tightly controlled by the container manufacturing sector than in the past, it will likely result in higher new container prices,” said Andrew Foxcroft an analyst who contributed to the report.
He said that the dominant Chinese container manufacturing industry was restricted to operating at half its maximum twin-shift potential throughout 2010, largely because of problems associated with restarting factory lines – and particularly rehiring labor – after more than a year of idleness. ??
“If capacity is more tightly controlled by the container manufacturing sector than in the past, it will likely result in higher new container prices,” Foxcroft said.
Material/production costs are also forecast to rise over the longer term, thereby providing a further inflationary stimulus.
?“It remains to be seen if continued high container prices will deter new investment, particularly from cash-strapped shipping lines who have found it harder to secure financing in recent years,” he added.??
Drewry expects that the availability of containers will be tight during the forthcoming peak season, but that problems of shortages of boxes will not be as acute and as widespread as in 2010.
Logistics Management was told that some of these fears may be exagerated, however.
“The freight rate trends do not suggest that anybody – neither carriers nor shippers – really believe that there will be container shortages or capacity constraints,” said Peter Freidmann, executive director of the Agriculture Transportation Coalition. “It appears that the demand for ocean transportation services is declining, and in fact there may not even be a peak season this year.”
For related articles click here.
Subscribe to Logistics Management magazine
entire logistics operation. Start your FREE subscription today!