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Container Demand Weakens

Monday, 11th October 2010
There are some signs of relief, perhaps temporarily, in the shipping container market. With seasonal imports increasing in line with tradition some lines have reinstated their resale policies rather than repositioning empty equipment back to China, a sure sign of weakened demand in the Far East. It has also been reported in the trade press in the last few weeks that a large number of vessels will be laid up, signalling a softening of the buoyant market the carriers have enjoyed over the last 9 months. It has even been suggested that a number of the new 10000 + TEU vessels coming on stream for one line will go straight into lay-up. As freight rates fall this decrease in capacity may stabilise the market for the time being. The factories too have seen orders curtailed, perhaps due to uncertainty in the market or buyers waiting until the new financial year before allocating funds. Prices however have moved only very slightly, any further falls will be minimised as they are still yet to return to full capacity. For the U.K second hand container market the slight increase in available stocks has yet to have any effect on price. The quantity coming through is still not sufficient even to fulfil traders outstanding orders and the market is a very long way from becoming overstocked. One perhaps less obvious casualty of the container shortage is the self storage industry. As prices increase and stocks diminish their ability to expand is made all the more difficult. Unable to increase prices due to a hugely competitive market in London and Essex, many have switched to leasing for now until such time as prices stabilise. Those with unused 40ft containers are turning to conversion companies to have them modified into 2 x 20ft or 4 x 10ft as stocks are not available from the usual sources. Any return to normality in the U.K market will be welcomed by them.

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