Why would something on the other side of the world affect the local container market? Tariffs, changes to manufacturing standards, and fear of pandemics like the novel coronavirus can all have an impact on the supply and price of storage containers. In order to ride out fluctuations in supply on new or used shipping containers, it’s important to understand what’s happening in the global marketplace.
International Market Restrictions
In the shipping industry, a combination of market forces, trends, and regulations can have a rippling effect on all parts of the supply chain. With shipping containers in higher demand than what is currently being manufactured in 2020, prices are on the rise.
In many cases, container suppliers have underestimated the need for global shipping capacity in recent years and have failed to increase their container inventory. Container lessors and buyers that were low on capacity have now been left to source products in a tighter market.
Some companies stay ahead of the curve by closely monitoring the supply and prices of the container market. Through building relationships with suppliers, container suppliers like Conterm can monitor their inventory and continue to offer fair prices on their in-demand assets of shipping containers, customized modified container applications, and container rentals.
Introduction of New Standards in China
90% of all containers used on ships for international trade are made in China. When Chinese manufacturers make changes to their standards, such as the 2017 discontinued use of oil-based paints that release toxic fumes, it affects their processes, tax implications and costs.
Chinese manufacturers may unexpectedly close their doors for several months in order to retool and update their facilities to incorporate changes to product standards. For the market, this can mean that purchasing new shipping containers for sale becomes even more competitive.
When manufacturers resume production, it may affect their output. In the paint example, water-borne paints that have less of an environmental impact took longer to dry than oil-based paints, causing fewer containers to be completed compared to past levels. Since it might take longer to receive a container order, it can affect the bottom line for container traders, lessors and commercial suppliers, thereby increasing the price and demand of new containers.
Coronavirus Infecting the Container Market
Since the outbreak of the Wuhan coronavirus in mid-January, container traffic has decreased dramatically. While the full impact of the coronavirus outbreak on container volumes isn’t measurable until ports announce their throughput numbers, a reduction of over 20% is expected.
The disruption in shipments out of China affects other major ports. The service frequency for shipments along the core Asia-Europe trade lane is reduced, causing congestion in countries neighbouring China.
International shippers are using container yards in South Korea to store China-bound cargo for later delivery. As the coronavirus spreads to these ports as well, it could make shipyards even more congested.
Conterm Shipping Container Supply and Pricing
Planning ahead and knowing your requirements is the best way to minimize the effect of supply fluctuations. If you have any queries about supply and pricing on shipping containers for sale, container rentals, or shipping container modifications, please contact Conterm today. It would be our pleasure to answer your questions, show you our available stock, and help you with your unique requirements.