Buying Shipping Containers

How is the Coronavirus Disrupting Supply and Pricing?

With many factories operating at a fraction of capacity, and with trucks not delivering a lot of finished goods, container-shipping lines have been canceling many sailings. “If there’s nothing coming to the dock, there’s no reason for the ships to come,” said Simon Heaney, senior manager for container shipping at Drewry, a maritime research firm in London.

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The disruption is evident across the Pacific.

The Port of Los Angeles, which handles more containers in a year than any other in the Western Hemisphere, expects in the first three months of the year its biggest decline in volume since the financial crisis, according to its executive director, Gene Seroka.

Ship operators have canceled about 40 sailings to the port from Feb. 11 to April 1, a drop of about 25 percent from the typical volume after the Lunar New Year, Mr. Seroka said. Overall container volume at the port is expected to be down 15 percent in the first quarter compared with the same period last year.

At the same time, exports and empty containers are piling up, he said. And even though an eventual recovery should lead to a rebound in imports from China, it will not restore all of the shipments that have been canceled.

The Result

So the real question is how does this impact pricing and supply in US markets? The answer is a short and expected one. Inventory levels are shrinking fast and new and used shipping container pricing is rising almost daily at ports in North America.

The timing for the crisis could not have been worse. As the factories in Asia closed for the Chinese new year, the coronavirus emerged. This has increased the work stoppage time far past its norms. With no new shipping container production for several months now, suppliers are reacting by no longer selling containers into resale markets, as they are needed to support cargo transport requirements. This means re-sellers like containerdiscounts.com, do not have access to normal supply levels. 

Pricing quickly follows suit, based on normal supply and demand. Retailers franticly buy up available stock that is on the ground, and with no new inventory available, pricing is increased to offset lower volume sales expected over the coming months.

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Of greater concern is we don't see a clear end in site. With no exports leaving Asia for US ports, the stockpiles of containers that must be shipped when the sailing resumes is growing by the day. This has a particularly sharp impact on "New" One Trip Shipping Containers. Once the production in factories resumes, these newly built containers will need to "wait in line" for the stockpiles of backlogged cargo in the Asian Ports to clear before those new containers can be brokered with cargo, and shipped to US for access by retailers.

So Whats Next?

Until we know much more about the return to normality, pricing will continue to rise. If you've been sitting on the bench waiting to purchase equipment for an upcoming project or storage need, we suggest you move fast. Pricing will certainly be higher than the last time you checked, and if you're in need of something specific or large quantity orders, it may be challenging to procure. This is especially true for inland markets, where stock tends to dry up faster than coastal port locations.

Be sure to check our online store for pricing and inventory. We will be doing our best to keep up with rapid changes, and we are available to discuss any upcoming purchase requirements you may have. 

If you have questions, we suggest you book a meeting with one of our product specialist who can share the most current information.

If you're still in price research mode, use our quote form below to get a formal quote emailed to you.

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Written by Container Guru / March 2, 2020

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