As we are more than a year into the current COVID19 global pandemic, we have been monitoring the ripple effect across all industries worldwide. As factories shutdown around the world, particularly in Asia, the availability and demand for overseas exports stalled in early 2020. This includes the production of new shipping containers to be available for global exports. As vaccine efforts have ramped up considerably worldwide, the global trade industry has seen sharp upticks in demand for raw and consumer goods, ordinarily transported by these containers. Currently, countries across Asia that are heavily involved in exporting consumer goods are experiencing difficulties sourcing shipping containers to get back to their ports to deliver more goods overseas. This has caused an imbalance in the normal rotation of shipping containers across global routes. During normal periods, any shipping containers transported on ocean freighters would be loaded going each way. For the United States, like many countries, we receive more containers from imports compared to our use for exports. This results in the normal supply of shipping containers domestically once they end their cargo service. With the global trade industry out-of-sync due to the pandemic, overseas suppliers are having to recall empty containers from ports. Their goals are to have containers available to ship product out until the container industry can ramp up ordinary production of shipping containers back to normal levels.
What does this mean for you? If you are looking to rent containers for us, you won’t experience any issues as we have a stable supply of our normal rental fleet of containers. However, if you are looking to purchase a container, that is becoming more challenging as domestic ports and hubs have very few, if any, containers available for purchase since most are being sent back overseas following their normal delivery. Ordinarily, we purchase containers in bulk orders for us to receive favorable pricing and pass along those savings to our customers. As we followed these developments in 2020, we were able to stock up our supply of 20’ containers available for sale. Unfortunately, the 40’ containers are becoming much more scarce coupled with local demand depleting our available supply. In the interim, pricing of our sale containers has increased proportionate to the current replacement cost if we were to purchase containers from today’s peak prices. Once the global demand subsides due to the injection of new containers back into supply, we’ll start to see container prices return to what we’re all accustomed to.
What about containers from your rental fleet? Will you sell those? Our business was founded to provide containers available for short and long-term rentals to the local market. Our rental business consists of the vast majority of our normal business activities and annual revenues. While we continue to monitor this situation, we are hesitant to dip into our rental fleet to provide containers for sale once our sale containers run out. We do our best to maintain a balanced supply of containers based on our historical rental demand and ordinary business growth trends. We’re trying to insulate our rental customers from these changes by keeping rental rates stable by maintaining our normal fleet. If we start to short our rental fleet, our rental customers will experience similar price increases due to low supply and normal demand, just like those seeking to purchase containers.
We never forget that ‘Affordable’ is in our name and do our best to live up to that reputation in the pricing of our containers and how we operate our business. To learn more on the impact of the global shipping container shortage, visit https://www.cnbc.com/2021/01/22/shipping-container-shortage-is-causing-shipping-costs-to-rise.html