Subscribe to our free, weekly email newsletter!


Ocean Cargo: Containers and other equipment may be in short supply

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
By Patrick Burnson, Executive Editor
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.

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

While the holiday season is known to bring good tidings and cheer to all, it may also come with another thing that is not so pleasant: higher rate freights. That was the thesis of a commentary written by Mark Montague, industry pricing analyst and chief market-watcher for DAT, a Portland, Ore.-based subsidiary of TransCore.

Earlier this week, FedEx said it is expanding its International First service for early deliveries with the addition of 31 new origin countries, which will bring the total number of origin markets for the service to 97.

Monday, December 22 is pegged as UPS's peak delivery day, as the company expects to deliver more than 34 million packages that day, adding that it expects to see six days in December top last year’s peak shipment day delivery record of 31 million packages.

The time has come again for less-than-truckload (LTL) general rate increases (GRI), with various carriers recently announced their respective rate hikes in recent days.

Key market metrics in the form of capacity and rates appear to be continuing to work against shippers, according to the most recent edition of the Shippers Condition Index (SCI) from freight transportation forecasting firm FTR.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA