Textainer Group Hondings expects container prices to remain high by 2021.

Broadly based in Hamilton, Bermuda, Textainer focuses on the purchase, lease and resale of ocean freight containers.

In his perspective, container prices may remain high by 2021, as manufacturers are in a strong position to protect today’s high prices, while production capacity is severely limited.

While new production inventory is currently less than 200,000 TEUs, warehouse inventory is also at a historically low level, as evidenced by continued high utilization rates across the industry.

Container prices

The company also expects mega-ship deliveries and the introduction of IMO 2020 to continually positively impact the demand for leased containers in 2021.

However, the ongoing Covid-19 pandemic has added to the uncertainty about the growth of trade and the impact on the industry.

Textainer expects global demand growth for shipping to improve significantly in 2021 due to continued spending on consumer goods and once the Covid-19 pandemic is under control, subject to the successful launch of the vaccine.

Although manufacturers have increased production to meet market demand, additional capacity has been gradually added and further restricted by shortages of certain components.

In general terms, the maritime transport business has been characterized by cyclical fluctuations due in part to long periods of excess or shortage of vessel capacity.

Container leasing companies are partially insulated from the risks of these shipping cycles by the relatively short production time associated with manufacturing new containers.

Lead times for new container orders are typically only a few months, so the new container order rate can be quickly adjusted to reflect unexpected market changes.