Singamas Container Holdings Ltd, the second-biggest maker of shipping boxes, may increase prices 11 per cent this year after steel costs rose and the Japan tsunami exacerbated a global shortage of cargo boxes, Bloomberg reports.
'Mountains of containers were washed away,' chief executive officer Teo Siong Seng said in an interview in Singapore on April 15. 'Some of these containers will be replaced.'
The price of 20-foot cargo boxes may rise to US$3,000 for June and July deliveries depending on steel and labour costs, compared with about US$2,700 at the end of last year, he said.
Steel prices in China, where Hong Kong-based Singamas operates factories, have risen about 7 per cent this year.
The Japan tsunami and quake may generate industrywide demand for an additional one million replacement boxes over two years after containers were destroyed or contaminated by radiation from a damaged nuclear power plant, Quam Securities Co said in an April 8 note.
Steel prices in China, where Hong Kong-based Singamas operates factories, have risen about 7 per cent this year.
That loss has worsened a global shortage caused by shipping lines slowing vessels, a decline in production during the global recession and a world trade pick-up.
'Come late April, early May you will see the tightness coming in,' Mr Teo said. 'Ships are getting full.'
Singamas expects to make more boxes this year than 2010's tally of 640,000, he said.
Output surged last year after the company slashed production in 2009 amid the global recession.
The box-maker rose 1.7 per cent to HK$3.61 at 1.32pm in Hong Kong trading, compared with a 0.1 per cent gain for the benchmark Hang Seng Index.
It's more than doubled in the past year, outpacing a 78 per cent jump for the yuan shares of larger rival China International Marine Containers (Group) Co in Shenzhen.
Singamas plans to boost sales by selling more specialised containers, including refrigerated units and ones able to carry live fish. It expects these boxes to account for half of revenue within three to five years from about 19 per cent last year, Mr Teo said.
The company also makes containers that can be used as houses in undeveloped areas or disaster zones. The company has bid to provide house kits to Christchurch following New Zealand's worst temblor in 80 years in February, Mr Teo said.
It is also looking into sales in Japan following the magnitude-9 earthquake and tsunami, he said.
The price of these house kits, which are sold in Australasia, the Pacific islands and Africa, range from US$15,000 to US$100,000, he said.
The company's container production capacity will increase 13 per cent this year to 850,000 boxes after the completion of a factory move, Mr Teo said.
Power shortages and hot weather may hinder output during the June-September summer months, he said.
Production will increase next year as the company is investing about US$170 million building two new plants near Shanghai, Mr Teo said. They will increase the company's annual capacity to one million boxes in 2012.
Shipping lines slowing vessels has worsened a box shortage as longer journey times to the United States and Europe from Asia mean that boxes can't be used as often.
Container vessels operated at an average speed of 11.15 knots last month, 14 per cent less than two years ago, according to Bloomberg data, as lines slowed ships to pare fuel usage.
The shortage of boxes may stretch beyond 2012, as lines add more large vessels, which will likely operate at slower speed, Mr Teo said.
A.P. Moeller-Maersk A/S in February ordered as many as 30 ships able to carry 18,000 containers each, which will be the world's largest container vessels.
Demand may also jump around 2012 as many shipping lines and container lessors now plan to scrap boxes after 10 years of use, Mr Teo said. The global fleet is about eight-years-old on average, he said.
There were about 29 million containers worldwide as at January, Textainer Group Holdings Ltd, the biggest box-lessor, said on its website, citing Andrew Foxcroft Container Data UK.
'Mountains of containers were washed away,' chief executive officer Teo Siong Seng said in an interview in Singapore on April 15. 'Some of these containers will be replaced.'
The price of 20-foot cargo boxes may rise to US$3,000 for June and July deliveries depending on steel and labour costs, compared with about US$2,700 at the end of last year, he said.
Steel prices in China, where Hong Kong-based Singamas operates factories, have risen about 7 per cent this year.
The Japan tsunami and quake may generate industrywide demand for an additional one million replacement boxes over two years after containers were destroyed or contaminated by radiation from a damaged nuclear power plant, Quam Securities Co said in an April 8 note.
Steel prices in China, where Hong Kong-based Singamas operates factories, have risen about 7 per cent this year.
That loss has worsened a global shortage caused by shipping lines slowing vessels, a decline in production during the global recession and a world trade pick-up.
'Come late April, early May you will see the tightness coming in,' Mr Teo said. 'Ships are getting full.'
Singamas expects to make more boxes this year than 2010's tally of 640,000, he said.
Output surged last year after the company slashed production in 2009 amid the global recession.
The box-maker rose 1.7 per cent to HK$3.61 at 1.32pm in Hong Kong trading, compared with a 0.1 per cent gain for the benchmark Hang Seng Index.
It's more than doubled in the past year, outpacing a 78 per cent jump for the yuan shares of larger rival China International Marine Containers (Group) Co in Shenzhen.
Singamas plans to boost sales by selling more specialised containers, including refrigerated units and ones able to carry live fish. It expects these boxes to account for half of revenue within three to five years from about 19 per cent last year, Mr Teo said.
The company also makes containers that can be used as houses in undeveloped areas or disaster zones. The company has bid to provide house kits to Christchurch following New Zealand's worst temblor in 80 years in February, Mr Teo said.
It is also looking into sales in Japan following the magnitude-9 earthquake and tsunami, he said.
The price of these house kits, which are sold in Australasia, the Pacific islands and Africa, range from US$15,000 to US$100,000, he said.
The company's container production capacity will increase 13 per cent this year to 850,000 boxes after the completion of a factory move, Mr Teo said.
Power shortages and hot weather may hinder output during the June-September summer months, he said.
Production will increase next year as the company is investing about US$170 million building two new plants near Shanghai, Mr Teo said. They will increase the company's annual capacity to one million boxes in 2012.
Shipping lines slowing vessels has worsened a box shortage as longer journey times to the United States and Europe from Asia mean that boxes can't be used as often.
Container vessels operated at an average speed of 11.15 knots last month, 14 per cent less than two years ago, according to Bloomberg data, as lines slowed ships to pare fuel usage.
The shortage of boxes may stretch beyond 2012, as lines add more large vessels, which will likely operate at slower speed, Mr Teo said.
A.P. Moeller-Maersk A/S in February ordered as many as 30 ships able to carry 18,000 containers each, which will be the world's largest container vessels.
Demand may also jump around 2012 as many shipping lines and container lessors now plan to scrap boxes after 10 years of use, Mr Teo said. The global fleet is about eight-years-old on average, he said.
There were about 29 million containers worldwide as at January, Textainer Group Holdings Ltd, the biggest box-lessor, said on its website, citing Andrew Foxcroft Container Data UK.