Shippers making quicker turns: Report

Shippers making quicker turns: Report

Shippers companies are getting containers back into the supply chain faster to counter a growing equipment shortage, according to a new industry report.

The turn times for dry vans -- the prime movers of international containerized trade - have dropped nearly 20 percent this year, according to research by International Asset Systems, an Oakland, Calif.-based logistics management firm.

IAS predicts "a significant tightening of container equipment in the world market, and that its customers and the shipping industry are "gearing for a squeeze on the existing world fleet."

The report, which analyzed indicators such as container facility inventories and land-side turn times at 600 depots over the past three months, confirms recent reports that steel shortages are affecting container manufacturers' ability to meet demand. IAS said one of the first indications that the market is tightening is that depot inventories are down. "[O]utbound activity has significantly exceeded inbound --indicating a draw-down of container stocks -- by 41 percent," said Heidi Regier, IAS senior market analyst.

Industry observers say China's vast appetite for raw materials has created the pinch in steel supplies.

The leasing sector, typically a steady supplier of equipment to the industry, may not be able to meet equipment demand. James Sherwood, president of Sea Containers Ltd., told IAS that he had never seen such a shortage of steel in the container industry. "At a price, steel will be available to manufacture containers, but will the lessors and shipping lines be prepared to pay the resultant container prices?" he said.

IAS said its customers are dealing with the shortage by increasing productivity, cutting turn times by 19 percent in the past four months, effectively increasing available capacity in a tightening market.

"Sourcing equipment to meet cargoes is going to be key in the coming months and beyond," said Regier. "Our customers are responding to increased demand and rather than adding assets, companies are making their operations more efficient by turning their existing fleet quicker from one cargo move to the next through basic process automation and data communication, in order to shave time in-and-out of the depots and consignee facilities, for example."

IAS based its findings on over 1 million total transactions processed in 2004. Transactions, which include container facility gate moves, vessel loads and discharges, repair estimates, intermodal reservations, rail bills and work orders, are processed on a real-time basis via the IAS hub.