The humble shipping container has a new status in the Covid-19 pandemic: hot commodity.
Shortages of the ribbed steel boxes that have plied the global economy for a half-century are plaguing trans-Pacific routes in particular. The dearth is boosting the purchase price of new containers and lease rates by 50%, snarling port traffic, adding surcharges and slowing deliveries heading into the holidays.
A surge in Chinese exports and robust consumer demand in the US help explain the tightness, and major shipping liners like Hapag-Lloyd are scrambling to reposition their bigger, 40 foot containers from less busy parts of the world. Nico Hecker, Hapag-Lloyd’s director of global container logistics, dubbed it a “black swan” moment.
The German sea freight company is “experiencing the strongest increase in 40 foot demand following one of the strongest decreases in demand ever”, Hecker said in a post on the company’s website last week. “The containers must be returned to China as quickly as possible to be equipped for an expected strong fourth quarter.”
The squeeze shows up in an indicator developed by Container xChange, an online platform based in Hamburg, Germany. The latest reading of its Container Availability Index was 0.04 for the 40-foot extra-tall boxes – the size popular for consumer products – in Los Angeles, while Shanghai slumped to 0.22. On a scale of zero to 1, the dividing line between surpluses and shortages is 0.5.
Dire predictions that global trade would collapse this year prompted container carriers to cancel sailings to underpin freight rates. Those forecasts proved far too pessimistic, though, and industry observers now say a sharp second-half rebound may mean container volumes for 2020 end up not far off levels reached in 2019.
Economists have long debated whether international commerce lifts all economic boats and many nowadays agree that it does, in theory at least. But the market for a commodity like shipping containers is very much a zero-sum game, where winners and losers are decided by who does and doesn’t have their hands on available supply.
“I’ve had no used containers for sale for three or four weeks now,” said Chris Osborne, managing director of Budget Shipping Containers in Birmingham, England. “I am missing out on sales, definitely, by not having the stock there but I’m also not losing them to competitors because they’re in the same boat.”
About 35 million shipping containers are currently in use globally, making some 170 million full trips a year, according to Florian Frese, marketing director at Container xChange. About 55 million of those trips are made when they’re empty – on returns trips or as shipping companies realign them with the demand.
The current scarcity means importers are facing longer waits for their goods and might pay extra fees to secure the transport equipment. The impact can ripple beyond the flow of goods between the world’s two largest economies.
“The more profitable the China-US lane becomes, the more incentivised carriers are to divert containers from other lanes, increasing the prices on shipping in secondary markets,” said Eytan Buchman, chief marketing officer at Hong Kong-based Freightos, an online shipping marketplace.
“Historically, this has been a driver of higher intra-Asia rates, with spare containers located in Asia diverted to the trans-Pacific route.”
Shipping liners own roughly half the world’s containers, and the rest are owned by lessors including Bermuda-based Triton International, whose US-listed shares jumped 34 per cent in the third quarter, more than quadruple the increase in the S&P 500 Index.
Shares of Textainer Group Holdings, a San Francisco-based container lessor, surged 73 per cent in the last quarter and CAI International, a leasing firm also based in San Francisco, jumped 65 per cent.
“We hear from customers that they expect a fairly significant container shortage to remain through [to] at least Chinese New Year” in mid-February, Brian Sondey, Triton’s chief executive, said on a conference call in October.
He said leasing rates for new containers were up “well over 50 per cent” from the second quarter and its inventory of 40 foot containers is as “close to full utilisation as you can get”. Triton ordered $350 million worth of new containers for delivery in the first few months of 2021.
The beneficiaries of such booming demand are Chinese manufacturers that dominate the global market for newly built containers, the price of which has increased to about $2,500 each, from about $1,600 a year ago.
Industry figures show the availability of dry-freight containers produced in China were down to about 250,000 20-foot equivalent units at the end of October, from 871,000 in May. Order books are full until April or May next year.
More from Neighbourhood Watch
Paatal Lok season two
Directors: Avinash Arun, Prosit Roy
Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong
Rating: 4.5/5
Dengue%20fever%20symptoms
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Company name: Farmin
Date started: March 2019
Founder: Dr Ali Al Hammadi
Based: Abu Dhabi
Sector: AgriTech
Initial investment: None to date
Partners/Incubators: UAE Space Agency/Krypto Labs
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Global state-owned investor ranking by size
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China
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UAE
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Japan
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Norway
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Canada
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Singapore
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Australia
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Saudi Arabia
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South Korea
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A Cat, A Man, and Two Women
Junichiro Tamizaki
Translated by Paul McCarthy
Daunt Books
UAE currency: the story behind the money in your pockets
A general guide to how active you are:
Less than 5,000 steps - sedentary
5,000 - 9,999 steps - lightly active
10,000 - 12,500 steps - active
12,500 - highly active
AndhaDhun
Director: Sriram Raghavan
Producer: Matchbox Pictures, Viacom18
Cast: Ayushmann Khurrana, Tabu, Radhika Apte, Anil Dhawan
Rating: 3.5/5
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The biog
Name: Timothy Husband
Nationality: New Zealand
Education: Degree in zoology at The University of Sydney
Favourite book: Lemurs of Madagascar by Russell A Mittermeier
Favourite music: Billy Joel
Weekends and holidays: Talking about animals or visiting his farm in Australia
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Key figures in the life of the fort
Sheikh Dhiyab bin Isa (ruled 1761-1793) Built Qasr Al Hosn as a watchtower to guard over the only freshwater well on Abu Dhabi island.
Sheikh Shakhbut bin Dhiyab (ruled 1793-1816) Expanded the tower into a small fort and transferred his ruling place of residence from Liwa Oasis to the fort on the island.
Sheikh Tahnoon bin Shakhbut (ruled 1818-1833) Expanded Qasr Al Hosn further as Abu Dhabi grew from a small village of palm huts to a town of more than 5,000 inhabitants.
Sheikh Khalifa bin Shakhbut (ruled 1833-1845) Repaired and fortified the fort.
Sheikh Saeed bin Tahnoon (ruled 1845-1855) Turned Qasr Al Hosn into a strong two-storied structure.
Sheikh Zayed bin Khalifa (ruled 1855-1909) Expanded Qasr Al Hosn further to reflect the emirate's increasing prominence.
Sheikh Shakhbut bin Sultan (ruled 1928-1966) Renovated and enlarged Qasr Al Hosn, adding a decorative arch and two new villas.
Sheikh Zayed bin Sultan (ruled 1966-2004) Moved the royal residence to Al Manhal palace and kept his diwan at Qasr Al Hosn.
Sources: Jayanti Maitra, www.adach.ae
PREMIER LEAGUE FIXTURES
All kick-off times UAE ( 4 GMT)
Saturday
Liverpool v Manchester United - 3.30pm
Burnley v West Ham United - 6pm
Crystal Palace v Chelsea - 6pm
Manchester City v Stoke City - 6pm
Swansea City v Huddersfield Town - 6pm
Tottenham Hotspur v Bournemouth - 6pm
Watford v Arsenal - 8.30pm
Sunday
Brighton and Hove Albion v Everton - 4.30pm
Southampton v Newcastle United - 7pm
Monday
Leicester City v West Bromwich Albion - 11pm
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
Ticket prices
General admission Dh295 (under-three free)
Buy a four-person Family & Friends ticket and pay for only three tickets, so the fourth family member is free
Buy tickets at: wbworldabudhabi.com/en/tickets
SPECS
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The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
If you go
Flight connections to Ulaanbaatar are available through a variety of hubs, including Seoul and Beijing, with airlines including Mongolian Airlines and Korean Air. While some nationalities, such as Americans, don’t need a tourist visa for Mongolia, others, including UAE citizens, can obtain a visa on arrival, while others including UK citizens, need to obtain a visa in advance. Contact the Mongolian Embassy in the UAE for more information.
Nomadic Road offers expedition-style trips to Mongolia in January and August, and other destinations during most other months. Its nine-day August 2020 Mongolia trip will cost from $5,250 per person based on two sharing, including airport transfers, two nights’ hotel accommodation in Ulaanbaatar, vehicle rental, fuel, third party vehicle liability insurance, the services of a guide and support team, accommodation, food and entrance fees; nomadicroad.com
A fully guided three-day, two-night itinerary at Three Camel Lodge costs from $2,420 per person based on two sharing, including airport transfers, accommodation, meals and excursions including the Yol Valley and Flaming Cliffs. A return internal flight from Ulaanbaatar to Dalanzadgad costs $300 per person and the flight takes 90 minutes each way; threecamellodge.com
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The five pillars of Islam
UAE gold medallists:
Omar Al Suweidi (46kg), Khaled Al Shehhi (50kg), Khalifa Humaid Al Kaabi (60kg), Omar Al Fadhli (62kg), Mohammed Ali Al Suweidi (66kg), Omar Ahmed Al Hosani (73), all in the U18’s, and Khalid Eskandar Al Blooshi (56kg) in the U21s.
