Container Scacity Looms As Shipping Lines Experience Shortage

There are indications of container shortages all over the world as major liners and cargo shippers are now facing mounting container shortages.

Three of the largest container-equipment lessors — Triton (NYSE: TRTN), Textainer (NYSE: TGH) and CAI International (CAI) — conducted virtual presentations for institutional investors over the past week, and it showed that importation into United States has further caused the scarcity because shippers are bringing orders forward.

Already, the container shortage is already spreading in India and it is causing long delays for exporters, especially on US trades.

Shippers now transport lighter cargoes such as consumer goods in 40-foot containers. They ship heavier cargoes such as raw materials in 20-footers.

Triton noted that the 40-foot sector “is the tightest portion of the market.” Its own portfolio is now at nearly 100% utilization. In contrast, the 20-foot segment, more prevalent in the intra-Asian raw-materials trades, is softer.

Container lines own a portion of their container portfolio and rent the rest from box equipment lessors.

One of the key takeaways from the Triton presentation was that “the surprising strength in trade meant that shipping lines were structurally short on containers.”

Compounding the capacity crunch, lessors noted that due to “changes in labor regulations [in China], the manufacturers are limited to one shift per day, effectively capping production levels.”

Triton pointed to “the ongoing strength of the consumer and the shift in consumption away from services and experiences into goods, particularly anything related to the home.”

“Triton expects to see sustained heightened activity through the fourth quarter, while demand could remain strong through the Chinese New Year [in mid-February 2021],” reported KBW.

A handful of producers in China build almost all of the world’s containers. “At this point, factories are now full through January and are taking orders for February and March delivery,” KBW said, reporting on Triton’s presentation.

“Based on indications from customers [shipping lines], demand looks like it is going to continue into the first quarter,” speakers said in the Textainer and CAI presentations.

According to New Jersey-based Worldwide Logistics (WL), the equipment shortage has spread to India, partly due to a drop in import volumes from China after trade restrictions were imposed by the government.

“The shortage is most critical at Inland Container Depots (ICD) but also evident at port-side locations,” a freight forwarder noted