Container Boom Sees Depots Emptied
Thursday, 22nd April 2010
For container leasing companies or storage and repair depots at the moment the global economic crisis seems a distant memory already. Shipping lines are picking up equipment the world over in huge numbers, depleting stocks rapidly. Thousands of containers have been on-hired in the last months with 40ft high cubes now almost completely on-hired from most depots in every region.
There are several reasons for this upsurge in activity. World trade has picked up and this has led to new demand for imports and exports. Credit availability is still very hard to come by, particularly for those shipping lines already maxed out. With new container prices going up in China and those factories left still not running full shifts it is no surprise that leasing is currently the preferred option.
A knock on effect of this is the prices of new and used containers for sale. As with any supply and demand situation the leasing companies are now concentrating on their core business rather than resales and the lines are running everything they can load. Conversions and modifications too will increase in price as the cost of boxes looks set to keep rising.
Shipping lines are still suffering financially, something the leasing companies need to keep in mind. Just a few months ago rumours were abound that many of the big names were on the brink of bankruptcy with the dire state of their finances laid bare in the financial, trade press and even national newspapers. Governments had to step in with loans, banks and investors faced with losing huge sums renegotiated finance agreements and effectively are now huge shareholders in many lines. This has all come at a very high cost for the lines with loan repayments now mounting up. Coupled with this many shipping lines also placed orders for new vessels during the previous boom when cheap credit was abound and looked to last forever. The reality has turned out to be far from that for the lines. New build orders are beginning to come on stream and the shipyards will be requesting payment.
Bigger and bigger vessels are now the order of the day. Freight rates have increased dramatically however the lines are now rushing to put back into service vessels which were previously laid up. This increased competition will before long see rates once again erode and become increasingly competitive. The only way for shipping lines to survive and make the revenue needed to stay afloat, repay their debts and make a profit will be through running the bigger vessels and making economies of scale.