With the container price being driven largely by supply and demand, this has resulted in a sharp increase in prices across both new and used containers. The new container price has increased by approximately 30% over the last few months and the used price has increased as much as 40%. That is if you can find a container to buy in China at the moment!
What has caused this sharp change in the market? It seems to have been a combination of many factors, a perfect storm one might say. For one, the Hanjin liquidation has resulted in a short-term instant reduction in availability as all their containers and the containers they have on lease have been frozen during the liquidation process.
In addition, container lessors and shipping lines have built very few containers during 2016, and there has therefore been limited replacement of the containers that have been sold off during the year. Finally, the Christmas rush for exports from China in October and November has resulted in a strong offtake of containers, and this has driven the increased demand.
What does this mean for container buyers in SA? Well most of the container supply that comes into SA is from the Far East and it is only a matter of time until we see the prices starting to rise here too. In fact, we have already seen it; we have just been protected by the slightly firmer rand since September, which has meant that prices have only increased marginally. This will however change and the prices are forecast to climb rapidly in Q1 of 2017.
How sustainable is this situation? As two of the factors creating this sharp supply shortage are short term, it is unknown at this stage how long it will last. The fundamentals of depressed global trade do not seem to have changed, so in my humble opinion it will not last long. It has however caught everyone in the container industry by surprise and has been a welcome change to the lengthy spell of oversupply that we have faced during 2016.