Container depots face a flood of unwanted boxes as retailer inventories run high and demand continues to weaken.
Gary Howard | Nov 08, 2022
A report from Container xChange warned that there are a range of ripple effects of the order to inventory ratio, most notably a lack of space in depots.
Andrea Monti, CEO of Sogese owns container depots across Europe and spoke of turning business away due to capacity issues: “Whatever was coming in and out of, for instance, our Milan depot is quite stuck. And the container volume at the depots is increasing to an extent that we are returning some requests for depot service agreements. We are in a situation where we are not able to accept new clients for some locations.”
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Christian Roeloffs, co-founder and CEO at Container xChange warned that pressure on depots is set to increase.
“There is just not enough depot space to accommodate all the containers. With the further release of container inventory into the market (e.g., from the disposal of leasing fleets), there will be added pressure on depots in the coming months. This will be a key challenge for some and a competitive advantage for others in the business, especially in China because of the empty container repositioning there,” said Roeloffs.
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Space at depots may come at a literal premium in the coming months, should depots hike container storage costs to dissuade customers from storing boxes long term.
Roeloff predicted that demand for shipping capacity will increase again once retailers work through their existing inventories, but demand won’t hit pre-pandemic levels.
“What has happened now is that the cargo is “on time” again and hence you’ll see a slowdown in new ordering as companies adjust to this more efficient turnaround times in ocean freight delivery,” said Roeloffs.
Container xChange said that rising imbalances in supply and demand for containers, rising empty container repositioning to Asia and tighter depot space will be topics for attention well into the year 2023.
“A majority of those polled by Container xChange in the month of October echo that the freefall of container prices is NOT an indicator of global economic normalisation well into 2023. Clearly, the industry is not upbeat about the supply chain getting back on track,” the company said.
Reference Link: https://www.seatrade-maritime.com/containers/slack-container-market-test-depot-capacity