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Home » Freight-Rate Rise Tied to Shortage of Shipping Containers

Freight-Rate Rise Tied to Shortage of Shipping Containers

July 28, 2010
American Shipper

The tail is wagging the dog this year in the container shipping business.

A shortage of shipping containers is being attributed as a prime cause of rising freight rates and shippers' difficulties in moving their products to buyers.

"I was with the president of a large Asian container liner shipping company last week, and we were talking about the massive rebound in rates over the last six months," said Loli Wu, managing director and head of Americas transportation and infrastructure investment banking at Bank of America Merrill Lynch. "I asked for his views on what was contributing to that. And he kind of surprised me, because he said one of the biggest contributors has been tight box supply."

Wu said it was "almost unfathomable" that the effect of the container shortage was so great, given the smaller capital outlay for containers when compared to other parts of the supply chain.

"We somewhat marvel at it ourselves," Brian Sondey, president and chief executive officer of container-leasing company TAL International Corp., said. "The lowly container is the bottleneck for global containerized trade. There just is no faster way to expand the container fleet quickly."

Stocks of publicly trade container-leasing companies like TAL, Textainer and CAI International rocketed to new 52-week highs this spring and summer. In July companies like Hapag-Lloyd and A.P. Moller - Maersk raised earnings projections for the year. 

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KEYWORDS Food and Beverage Global Logistics Global Supply Chain Management Logistics Ocean Transportation SC Security & Risk Mgmt Transportation & Distribution
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