SINGAPORE Prices for shipping containers, the metal boxes that carry 90 percent of the world's manufactured goods, have risen to their highest since October 2015, a clear indicator that seaborne trade is increasing and should grow further this year.
The Harpex Shipping Index, which tracks weekly shipping container rates, has climbed 40 percent this year to 439 points. Container charterers say that lead times to order container have risen, to over a month in some cases, as not enough are available to meet demand.
The tight market for the standardized boxes is a result of carriers cutting overcapacity and follows some bankruptcies. But the gains also point to a recovery in global trading after years of lacklustre growth.
"The market seems tight... (and) we are urging liners to release more box," said Willy Lin, chairman of the Hong Kong Shippers' Council, which represents manufacturers and cargo owners.
Sector-specific factors like the scrapping of excess ships and the bankruptcy of South Korea's Hanjin Shipping have pushed up the index. But, shippers also say that increasing international trade has added to the container shortage.
Rene Pedersen, Asia/Pacific representative in Singapore for AP Moeller-Maersk, the world's biggest container shipper, said his company expected global container demand this year will rise between 2 percent to 4 percent, compared with just 1.5 percent to 2 percent growth in 2016.
RISING ASIAN TRADE
The container shortage is happening as manufacturing across Asia's big three biggest economies - China, Japan and India - grew unexpectedly fast in the first quarter, adding to evidence that the world's biggest economic region is gaining momentum.
"China's export box transport market is recovering," the Shanghai Shipping Exchange said in its most recent report, adding that growth in the United States' economy was resulting in "a firm recovery in the North America route (from China)."
The average export volumes from East Asia, including Japan, South Korea, Taiwan and Singapore, in February were more than 5 percent higher than a year ago, Capital Economics said in a March 27 report, citing various sources.
"Economies in Europe and the U.S are (also) picking up," Maersk's Pedersen said.
Despite the jump in container rates this year, the Harpex Index remains relatively weak at a third below its last peak in 2015 and 76 percent under its 2005 record.
Maersk's Pedersen said that "the container industry is not out of the woods yet" but that "increased consolidation activity... could lead to a more sustainable industry in 2017."
(Additional reporting by Keith Wallis; Editing by Christian Schmollinger)