Shippers and carriers can expect container supplies to remain tight this year as the industry tries to catch up from box manufacturers’ lost year of 2009, the World Shipping Council said.
In an analysis of container supply, the WSC said the shortages will force shippers and cargo interests to plan and forecast carefully to ensure they have containers when and where they’re needed. The report looks at global trends, not individual trade lanes.
The report notes that supply and demand were thrown off kilter by the recession, which in 2009 produced the first-ever annual decline in global container shipping volume. Production of new containers, which had averaged 3 million 20-foot-equivalent units a year, virtually ceased.
Chinese manufacturers resumed production last year, but production during 2009 and 2010 totaled only 2.95 million units. “As a result, at the start of 2011, the global container fleet had approximately 3 million fewer containers compared to levels to which the industry had become accustomed,” the report said.
The WSC said that global container supply now totals 18.605 million containers, or 28,535 million TEUs.
Manufacturers are expected this year to produce about 3.5 million TEUs -- 60 to 65 percent of maximum production capacity of 5.5 million to 5.7 million TEUs. Factories could produce up to 4.5 million TEUs without adding staff or production lines but are unlikely to do so without firm orders in hand, the WSC said.
With global container volumes approaching pre-recession, levels, the WSC said container supplies appear tight by several benchmarks, including ratios of container inventories to vessel container slots, loaded containers to container inventories, and container scrapping rates.
Alphaliner forecasts the ratio of containers to vessel slots will drop to 1.99 by year end from 2.03 in 2010 – the lowest ratio on record and far below the 2.99 ratio of 2000.
The ratio of loaded TEUs to container inventories ranged from 4.5 to 4.7 from 1990 to 2002, before rising above 5 except for a dip to 4.97 in 2009. It’s forecast to be 5.62 this year and 5.52 in 2012.
About 5 percent of existing containers have been scrapped each year over the past decade. Nomura International (HK) said that rate fell to 3.8 percent in 2010 and is expected to be 4.5 percent this year before rising to 5.3 percent in 2012.
On the plus side for container supply, tight supplies and high demand are causing carriers and leasing companies to keep boxes in service longer. The WSC said that trend is likely to “somewhat mitigate the effects …of certain operating conditions, like slow-steaming.”
Container supplies became tight when cargo demand unexpectedly surged in early 2010 and carriers slowed vessels to reduce fuel costs. Slow-steaming reduced the number of trips a container could make.