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06/07/2010
Box shortage rebalances supply and demand scenario
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In the lead up to this year both industry observers and shipping lines feared that the excess capacity that plagued them in 2009
would continue into this year. However, an unexpected surprise has emerged as shipping lines are now confronted with a container shortage.
Container manufacturing fell from a peak of 5.4 million TEU in a single year to just under 500,000 TEU in 2009. Although there has been some recovery in the market already, projections for the full year put total box manufacturing for 2010 at roughly 1.5 to 2.0 million TEU.
Estimates for 2011 also suggest that the recovery in box manufacturing will be slow and steady - which is news that shippers will undoubtedly be none too fond to hear.
According to one of the largest container leasing companies in the world, there are two primary reasons for the slow recovery in box manufacturing ...
1) The availability of skilled workers.
'Most of the container manufacturer employees were sent back to rural areas during the financial crisis, and due to the Chinese government's policy to focus on domestic spending, particularly focusing on the areas of infrastructure in rural areas, there has been a surge in rural employment', the source said.
2) The confidence level of the container manufacturers.
'Due to the uncertainty of the economic recovery, the container manufacturers have also adopted a slow recovery approach in relation to their production lines. Instead of running double production lines, many manufacturers now are just running on the single line to avoid the risk of a sudden collapse when they have to send back the workers', he added.
The current wait for delivery of new containers once ordered is three months. This means that for orders placed today, delivery cannot be made until early October.
Alphaliner reported in a recent report that box prices had slumped to US$1,200 per TEU at the trough of the crisis. Today this price has increased to $2,750 per TEU.
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