CONTAINER INDUSTRY
WorldCargo
news
Does recession spell the end
of the box repair business?
Container depots are enjoying a wel- for cost reduction, also signals that carriers Asia can expect large inventories for the
come upswing in storage revenues see little hope of an early recovery from foreseeable future.
as thousands of boxes are taken out the global recession.
of service. But customer pressure to Some leasing companies have looked Less severe
reduce rates, as well as repair holds, at the strategy of using ships for storage The European depot capacity and over-
restrictions on credit and a soften- in Asia, but as yet none has opted for this crowding picture is less severe than in Asia
Wall to wall containers: Most container depots in Asia are already full
ing second-hand sales market, solution. One advantage is that it keeps and varies from port to port. According to
present challenges to depot opera- containers in or close to the markets Willy Hansen, secretary of the Belgische storage capacity available, while in France, alternatives for overflow depot space. The
tors and are causing a shift in busi- where they are most likely to be needed Vereniging van Containerherstellers en the major depots still have space and are same is true in Bremen, with Antwerp be-
ness strategy. The depot industry is when trade begins to pick up. But it will Depothouders (BCHD) in Belgium, al- offering long-term overflow storage. In ing considered for excess inventories. De-
likely to look a lot different when it be some time before the current backlog though some depots are full, some newer Hamburg, though, facilities near the port pots in The Netherlands are for the most
emerges from the current recession of equipment is exhausted and depots in “third generation” depot operators have are full and depots are looking to inland part full.
and global financial crisis.
Two years ago several container leasing
companies began raising the alarm about
land shortages, speculating that the amount
of space available for container storage
would be insufficient to cope with the in-
ventories that would result if the leasing
market softened.
Years of sustained high utilisation had
resulted in a gradual reduction of land set
aside for depots. In a presentation given to
the National Portable Storage Association
in 2007, Mike Baldwin, president of
ConGlobal Industries (CGI), predicted a
“storage train wreck” based on an analysis
of the amount of land in the United States
that had been relinquished by depots be-
tween 2000 and 2005.
During that period, the amount of
available off-dock land suitable for depot
operations was reduced by 30%. So even a
slight dip in utilisation was likely to cause
serious depot overcrowding, not only in
North America, but in all the world’s ma-
jor ports. A 5% drop would result in hun-
dreds of thousands of boxes being landed
on a global depot network that had long
since either sold or re-leased land for more
profitable uses.
Coming to pass
With negative growth in world trade and
the industrialised countries now experi-
encing the worst recession since the 1930s,
the anticipated overcrowded conditions
are beginning to materialise. For the first
time in nearly 10 years, leasing company
utilisation rates have fallen to 90% or
lower, shipping lines are laying up ships
and over 4M TEU of leasing company
and shipping line-owned containers are
estimated to be stored in depots in China.
As many as 400,000 TEU of new boxes
are also sitting in manufacturing locations.
Storage has, therefore, become one of
the main issues facing the container indus-
try in 2009. Inventories are up in all areas,
but demand for storage is not evenly dis-
tributed in the major markets. Depots in
Asia are heavily congested and are effec-
tively closed for new redeliveries, while in
North America, dramatic increases in
empty boxes have not yet occurred and in
The power of innovation.
Europe although some locations are close
to capacity, excess inventories are so far
being accommodated.
The visionary Reachstacker from Linde.
The most serious problem for carriers
and leasing companies is unquestionably
in Asia. Apart from the huge inventories in With its outstanding agility, superb precision and smooth control the Reachstacker from Linde
China, depots in Singapore and Hong
embodies all the finest qualities of refined power.
Kong are completely full. So severe is the
problem that carriers have begun to use
idle ships to store empty boxes. Several large
container vessels, decks full of empty con-
Much more than just the sum of its parts, here is Man and machine in harmonious action. The fully
tainers, are anchored in Singapore and
integrated, versatile and responsive control and operating system is a visionary concept designed to
Hong Kong harbours.
make life easier. Combine this with Linde’s truly global service, spares and technical back-up and you
Storing containers on ships allows car-
can understand why we are world leaders.
riers to mitigate the rapidly-mounting bur-
den of daily per-TEU storage fees charged
by terminal and container depot operators
and there is no shortage of ship capacity.
The visionary Reachstacker from Linde: the next generation of working solutions delivering
As of mid-February, idled container capac- greater productivity and efficiency.
ity had reportedly reached 392 ships total-
ling 1.1M TEU, or 8.8% of the world fleet.
That figure is set to increase as carriers sus-
pend more services and return chartered
vessels when they come off hire.
Short term strategy
One factor driving decisions to store con-
tainers on anchored ships is that not all
Linde Heavy Truck Division Ltd
leased vessels can be returned to their own-
Linde Industrial Park, Merthyr Tydfil CF48 4LA, GB
ers. In such cases, using ships to store con-
Phone +44 (0) 1443 624200, Fax +44 (0) 1443 624302
E-mail info.forklifts@linde-htd.com, www.linde-htd.com
Linde Material Handling
tainers has the added benefit of avoiding
wharfage fees. As industry observers have
noted, however, storing empties on
containerships, while a short-term strategy
March 2009 33
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