Container Storage And Repair Depots Face Challenging Times
Wednesday, 15th December 2010
There are some signs that the global container shortage is easing. The factories have increased production and orders are coming in from the lines at long last meaning there could be an end in sight for the gold rush for leasing company equipment.This will all however take time and for some depot owners and operators a few extra redeliveries may be too little too late. The recent global recession and downturn saw storage and repair depots bursting at the seams with queues of vehicles outside every day waiting to drop off. During this period they had the best opportunity to see if this was the business they wanted to be in. If a container depot wasn’t making money or barely breaking even then, it never would.
Stagnant rates, rising overheads and decreasing margins spell bad news for many industries and this has been the trend for depots. Land costs, insurances, raw materials, plant, salaries, taxes and administration costs have all increased. Lines and leasing companies have closed offices and transferred many operational tasks onto the depots, without any additional financial contribution. The depots have had to employ extra staff to deal with these tasks, the salaries for which have to be found. The cost of new containers from China and their residual resale values have seen repair volumes plummet as many lines and leasing companies now sell rather than repair.
The result has seen many depots close over the last 5-10 years and those that are left are getting smaller. Any surplus land not being used for the core business is being sold, handed back to landlords or in some cases used for other more profitable businesses such as self storage or container conversions and modifications.
For some time depots have propped up the core business with revenue from other areas such as shipping container sales, conversions and other related business. With the continuing decline in volumes from conventional storage, handling and repair it may not be long before many of the few remaining depots decide to cut loose the loss making core business, reduce in size and overheads and concentrate on those areas that make money.