Empty container demand at worrying levels

The ripple effect of surging demand and port delays around the Pacific has generated a critical shortage of containers for export especially refrigerated containers (aka Reefers).

When COVID-19 struck a year ago, the container industry was actually under pressure from excess equipment capacity. Container manufacturers reacted to the COVID crisis by winding down their manufacturing volume.

But retail simply jumped online and drove a supply curve few had expected. Demand for homewares, electronics, clothing, and builders’ materials was of the like not seen or experienced before. Vessels were reactivated in increased numbers to answer the call and have subsequently swamped ports worldwide denying them the ability to clear the ships in a planned / orchestrated manner.

The trade boom that has bounced the global economy upwards since mid-2020 has sucked up container supply and container manufacturers have been trying to catch up ever since. This has resulted in heavily congested ports in several countries, blanked ship calls, vessels off schedule, suspension of berth bookings and bottlenecked 20’ and 40’containers by the millions.

The costs of catching up have been significant. Bloomberg has reported brand new container builds are rising in base cost to around USD 3,000 per 20’ (TEU). Chinese box-maker CIMIC has pushed its build rate to 440,000 containers a month!

However, the empty containers already in circulation are not being returned in normal volumes for re-use and re-export. Reefer boxes are in high demand by primary producers. The demand for the available supply of refrigerated containers is causing concern that there will be delays in getting seasonal product away to world markets. I have personally heard of fruit rotting due to no containers being available for export.

The challenge for New Zealand is the high demand for food-grade container quality as only high spec/standard containers can be used when transporting food products. This means that many containers arriving into New Zealand are not suitable for export of New Zealand product.

Leave a Reply

Your email address will not be published. Required fields are marked *