Global Outlook For Shipping Containers On The Rise

The forecast for world trade is a sluggish economy. Early estimates of 3.6% growth have seen revision downwards because of GDP (Gross Domestic Product) easing in developed economies. However, trade from the developing economies is growing and should take up the slack.Subject to political adjustments, if things improve then growth can bounce back upwards to 3%.

Based on shipping data the above outlook seems to be on par. Maersk Line has forecast global container demand to grow between 2 and 4%. Although the middle of 2016 saw container rates dropping by about 22% strengthening of short-term rates has created brighter spots with the possibility that the New Year will witness renegotiating of contract prices.

GDP and container shipping prices correlation

What is the correlation between shipping rates for containers and global GDP growth? The answer is 90% of the world’s trade moves on the high seas. Land based movement of goods is mostly internal among countries. Globalization depends heavily on shipping container traffic and hence the spot rates as well as future rates indicate the benchmarks for growth.

Developing countries such as India and Indonesia will be the primary drivers in container traffic. With the opening of the PT New Priok Container Terminal at the Indonesian TanjungPriok Port shipping containers at Jakarta are in high demand. Container Bekas(used Containers in the Indonesian language) is now a niche business as several enterprises have started the business of new and used shipping containers.

Why Indonesia is at the center of used container market

Container traffic from India is also on the rise to about 1000 MMT (million metric tons) which means that growth at 5% plus should be relatively comfortable. The shipping container prices in India are on the higher side when compared to shipping containers in Indonesia for the simple reason that Indonesia has several uses for shipping containers. Bekas containers are used as restaurants, office spaces, and storage areas because Indonesia is the world’s largest archipelago meaning that traffic between islands is only via ocean and sea highways. Containers are the only way goods and finished material reach areas in Indonesia. It is quite common for smaller Indonesian ports to have a container terminal. Also, Indonesia is rapidly scaling up exports by value addition to their minerals and ore thus opening the market for more shipping containers.

Internationally entities dealing with used containers were concentrated in Rotterdam in Europe and on the East coast of the United States of America. With China leading the way in container manufacturing (90% of the Containers in the world are manufactured in China) and increasing shipping container traffic from emerging economies of South East Asia, international companies such as Trade Corp have established container bases and trading offices in Indonesia and Singapore. Hong Kong has been Trade Corp’s headquarters for a long time ever since they decided that they need to relocate from their original starting place in Australia. Trade Corp is a world leader in container modification. They are always innovating in Container design. The demand is such that no sooner they announce that containers are available for sale there are multiple bids..