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Will We Ever See Cheap Containers Again?

Wednesday, 1st June 2011

Freight container prices are still rising. Whether new “one trip” or used there seems to be little let up for anyone looking to buy.

The main driver for this is basic economics, supply and demand. Shipping lines suffered badly during the downturn and many huge companies teetered on the edge of bankruptcy. Some lines were saved at the last minute with government bailouts and by renegotiating terms with their creditors in too deep to see these companies fail. Most have now returned to profit, however a new challenge faces them in the race to acquire bigger and more efficient vessels. Any available finances from the lines are being poured into new tonnage and much less emphasis placed on container orders. The trend had now gone full circle with lines opting to lease equipment rather than buy and have capital tied up in container stocks.

The knock on effect of the lack of new ISO container purchases by the shipping lines is that leasing company stocks are now running at the high end of 90% utilisation. New build orders are being placed by the leasing companies, at record levels, they are however going straight out ex factory to the lines on long leases.

Used equipment stocks are also drying up as container owners are reluctant to sell off any equipment that could be used for a few more trips. Demand and new box prices from factory in China have seen resale policy change dramatically.

Every aspect of the container industry is affected as prices continue to rise. Although labour costs remain fairly level container conversion costs increase due to the cost of the main component.

Even storage in London and Essex is affected by the global container shortage. Slow steaming on trade routes may seem to have little to do with the self storage industry, this coupled with the other factors contributing to higher prices however effects them too.

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