Shipping crisis as steel supplies cut

Tom McGhie|Mail13 April 2012

BRITAIN'S shipping industry is in crisis because a steel shortage is hitting the supply of freight containers.

It is a direct result of the booming Chinese economy, which is drawing in steel from all over the world.

The country's voracious appetite sent prices soaring 30% last year and is causing huge supply problems. This in turn has caused panic among China's own growing number of car and truck manufacturers.

Most global car makers are immune from price increases because they have steel on three-year fixed contracts.

But container makers are being forced to cut back on deliveries to ocean carriers and leasing companies because there are simply not enough containers available.

James Sherwood, president of Sea Containers, has warned that the industry will face severe shortfalls within weeks because the supplies of steel have run out in most of Asia.

He said he 'had never seen such a shortage of steel in the history of the business'.

One of the biggest container manufacturers had told Sherwood that though it needed 20,000 tons of steel to meet monthly requirements, only 1,000 tons were available.

But the shortages have boosted trade for Sea Containers. Sherwood said the 20,000 containers his firm had available for lease in the Far East had all been booked and orders for two or three times that number had been turned down.

New containers are being rationed by manufacturers to all buyers, whether leasing companies or ocean carriers.

Lease rates have rocketed by as much as 50% over the past year, Sherwood said, while the price of a new 20 foot container had jumped from £777 six months ago to £1,000.

There have been unexpected repercussions. Police across Britain are facing an outbreak of manhole cover thefts as petty criminals exploit the shortage. And with scrap metal prices rising to record levels, the 'great drain robbery' has jumped to unprecedented levels.

In Gloucester, 80 manhole covers have vanished - each with a scrap value of about £7.50.

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