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Shipping Container Shortage Pushing Up Prices

  
  
  

Freight shipping volume has been picking up in 2010 and while that is great news for the world economy it has caused an unexpected shortage of containers. According to the July cover article in American Shipper, this shortage in shipping containers is being sited as one of the main causes for the rise in freight rates and has led to difficulty in moving product to buyers. Many shippers have complained about signing contacts with shipping lines only to have rates rise the following week or to be denied space completely. The average price for a 20ft shipping container has grown from about $2,000 to $2,700.

One of the major reasons for the container shortage was the drop in production of new shipping containers in 2008 and 2009.  From 2004 through 2008, TEU supply grew by an average of 8% per year. Once the world recession hit, trade dropped dramatically and so did demand for shipping containers. There was a 95% reduction in shipping container production in 2008 and almost no containers were built in 2009. In response to the drop in demand many of the factories that build the containers, mostly based in China, were forced to shut down. Now with the increased demand for there is a reduced capacity for factories to produce new containers. Some estimate that it will be until 2011 before production will be able to catch up with demand.

While this shortage is bad for manufactures and ultimately consumers, container-leasing companies are appearing to benefit in the short run from this problem. Stocks of publicly traded container-leasing companies have reached 52-week highs this spring and summer. Additionally many leasing companies are taking the opportunity to increase their share of containers. Historically, liner carriers have owned about 55% of the world shipping containers with leasing companies owning the remained 45%. However, recently leasing companies have been responsible for 65-70% of the new container purchases. Leasing companies are also purchasing containers from the shipping lines who are in need of building up there cash reserve.

This shortage in shipping containers due to worldwide demand is a very good sigh of  economic expansion however many shipper are hoping that container product will soon catch up to demand.

Source: Boxed-Out, American Shipper

Comments

If there is little supply and high demand, price will increase. If its the other way around, the price will drop. Unfortunately, that's the way it is. But its good that the economy is picking up again. Gives you hope in the future.
Posted @ Monday, February 14, 2011 2:35 PM by 85942 Secure Portable Storage Containers
We will like to know if you people can ship International (Monrovia/Liberia).
Posted @ Monday, February 14, 2011 7:37 PM by Dennis
Yes, we do international shipping. 
 
www.universalcargo.com/form/
Posted @ Monday, February 14, 2011 7:42 PM by Raymond Rau
if you would like to have updated news on what is happening with the Pacific Rim market rates and why, please feel free to post questions here, or email me directly
Posted @ Monday, February 14, 2011 11:52 PM by Devin Burke
definitely a situation worth monitoring in regards to supplies of shipping containers in calgary and other markets.
Posted @ Saturday, April 23, 2011 10:16 PM by tom francisco
I wonder when there will be a glut in equipment and leasing companies start needing cash reserves ? 
 
 
 
if carriers cannot fill their vessels this year, they wont be needing too much more equipment one would think. 
 
 
 
nevertheless. anybody recommend some good stock tips of these companies ? 
 
Posted @ Friday, April 29, 2011 8:46 AM by devin
although this was written earlier in the year, some of what this is taking about has not happened yet. However in the overall scheme of things, the market is basically weak, and any increases coming from equipment shortage, peak season surcharges will be short lived. There is just too many enormous new vessels deployed out there. 
 
 
 
Posted @ Sunday, May 22, 2011 10:35 PM by devin
Although Amersk is implementing Chassis surcharges now, it is looking likde the carriers are pushing back the PSS until Aug now. It is projected that the BIGBOX retailers will be shipping the bulk of their freight in Aug and Sep, so look for rates to go up sometime in Aug. In the meantime low rates abound.
Posted @ Friday, July 08, 2011 11:36 AM by devin
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Please continue posting like this
Posted @ Tuesday, November 01, 2011 10:16 PM by burberry outlet
we are going to start a new line cargo for iran lines to around we bought already 10000 track so we are going to make a facvtory for manufacturing cargo container . who can help us
Posted @ Saturday, February 08, 2014 6:52 AM by hashem talebi
we arer readyu to increase the number of new shipping containers. alsoi we need old one.
Posted @ Saturday, April 26, 2014 6:50 AM by sani holding , hashem talebi
there is people working here to send containers to the market in iran  
Posted @ Tuesday, May 06, 2014 2:22 AM by hashem talebi sani holding
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