What Container Glut? Why Container Prices Are Not What You Think.
Update July 2015: This blog was originally posted in October 2011. In the meantime, container availability has gotten much, much better and priced have dropped back down to more normal levels. That said, we are still not back to the prices of the 1990's. Shipping lines have gotten better at keeping controlled quantities of sale containers in different cities—not too many, not too few. This has helped with keeping pricing reasonable and steady.
A steady supply available now
If you are looking for a container and it has been a couple of years since you (or your buddy) bought one, you may be going through a bit of sticker shock. It is not your imagination. Container prices are at an all-time high right now.
So what happened to that oversupply of containers and the container prices you were hoping for? The promises you have heard of free containers being handed out at the ports? The dream of a “cheap, used, battered up container for next to nothing”? A couple of things have happened:
When the economy tanked in 2008, shipping lines took ships off the water. There was less demand, so this made sense. But then they had containers all over the world and had to pay storage on those containers. So they sold them. If you bought a container in early 2009 or before, pricing was great! Containers were plentiful and wonderful! But then they ran out. With fewer ships moving, containers being sold, the oversupply turned into a shortage.
Meanwhile, fewer new containers were being built. Due to many factors between the container manufacturers, steel providers, shipping lines and many others, fewer new containers were manufactured in 2008-2010. This means that shipping lines were selling off their existing equipment, they were not replenishing it.
More people want containers. Containers are wonderful! They can be used for so many things from basic storage to housing. You really are only limited by your imagination for the possible uses of containers. With all these new uses, came increased demand worldwide.
The economy picked up. At least in shipping. The shipping lines have been increasing their number of ships on the water. That is great news! Except if you want a container. Since there were fewer containers out there in the shipping lines’ fleets and higher demand, they sold far fewer than normal. Which means the supply doesn’t meet the demand for used containers.
The end result – prices increased from 2009 through now. While the shipping lines and leasing lines are increasing their fleets, containers are being made and things will even out again, there still are not as many containers available as there once were. This has driven the price of containers up. All industry projections indicate that they will stay this way for some time to come as the situation did not happen overnight, nor can it change back overnight.
But I see a ton of containers when I drive by the port or rail yard!
Yes, you do. But that doesn’t mean they are available for sale. The shipping lines and leasing lines use those containers for shipping goods overseas. Containers are used over and over again throughout their life cycle. You are probably seeing containers either full of goods about to be shipped somewhere or coming in from somewhere, or you are seeing the empty containers being prepped to be filled and shipped out.