Container surfeit puts pressure on price

The market for shipper-owned
containers – still very much
the ideal solution for getting
project cargoes into Africa – has
slumped, according to Darren Singh,
operations director of container
suppliers and converters,
Container World.
“We wish that it was the same as
this time last year,” he said, “when
SA mining houses had stepped up
their exploration in Africa, with new
mining and drilling sites springing up
all over the continent.
“With the containers usually also
destined to remain permanently
on site – for storage or workshop
purposes, for example – shipperowned
units were a most costefficient
answer.”
This created a burgeoning market
for the company in the supply of
a wide range of containers – units
that were vitally necessary for the
movement of parts, equipment and
materials to many of these rather
remote sites.
But demand has gone for a loop,
according to Singh.
“Containers are in abundant supply
from various shipping lines,” he said,
“but very few buyers.
“The end-user market is also not
purchasing containers but leasing
instead.”
And both these segments of the
market are proving to be more chancy.
Said Singh: “Here again, you are
exposed to risks of bad debts, as
some of these companies close and go
under very quickly. This is evidence
that the current economic crisis is
hurting our industry as well.”
The prices of containers have
dropped sharply, and look likely to
drop further. “That will all depend
on the demand for second-hand
containers,” he said.
Singh described special projects
as “few and far between”, with those
that are in the pipeline having been
placed on hold due to funding.
“Not a pretty picture for the
container industry,” he said, “as many
are reducing prices to get a deal, and
that is not helping the market.”
This is hurting the smaller players
as well, according to Singh. “But,” he
said, “it will only be a matter of time
before it picks up again.”