Trend Data Support Predictions of Looming Container Shortage

Aggregate data show container inventories down; turn times emphasized as customers optimize operations  IAS report

Aggregate data show container inventories down; turn times emphasized as customers optimize operations  IAS report

Oakland, Calif. — April 15, 2004 — Data on container facility inventories and land-side turn times point to a looming container shortage, even as recent weeks have brought reports that steel supply shortages are affecting container manufacturers' ability to meet demand, according to a new analysis by International Asset Systems (IAS).

IAS, which provides asset management applications and Web-based services to the global container shipping industry, said that its customers and the shipper community at large are gearing up for a squeeze on the existing world fleet. One shipper told IAS that container supply in Asia is already tight. "Shipping lines are having trouble getting equipment to support a 200 [20-foot equivalent unit (TEU)] per month glass shipment from Shanghai," said Adam Firestone, president of California-based Firestone Vineyards.

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 asked.

One of the first indications that the market is tightening, according to IAS, is that depot inventories are down. "Analyzing activity at over 600 depots over the last three months, outbound activity has significantly exceeded inbound (indicating a draw-down of container stocks) by 41 percent," said Heidi Regier, IAS senior market analyst.

As world trade continues to grow, especially Asian exports to the United States and Europe, demand for containers is at an all-time high, compounded by the steel shortage, which makes supply more difficult than ever.

IAS pointed to a growing awareness and sense of urgency of its customer base, which includes 16 of the world's top 20 ocean carriers, regarding the need to rely on efficient turn times achieved through automating routine processes such as container repair approvals, which now average 3.1 days, an improvement of 40 to 50 percent over manual methods, and delivery turn-time, which has been reduced from over 300 containers in detention per month to just over 10 per month at one consignee thanks to automated container delivery- and stripping-event data processing.

"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."

The productivity of ocean carrier equipment has increased, IAS noted. The depot or terminal turn time for dry van containers, the prime movers of international containerized trade, has dropped 19 percent over the preceding four months. This improved efficiency provides an effective increase in capacity, assisting these carriers in the tightening market.

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