Shipping Lines use the same principles of supply and demand to judge freight rates as does any other business. Typically a
route in one direction is more popular than the reverse. For example containers travelling from China or Europe to the USA, bringing in finished goods, commanded a higher rate than the same containers being sent back to those overseas markets.
Shipping lines are keen just to re-position the container back to where the demand is greatest ready for the next load and
would happily take low value cargo (at low rates) like metal scrap just to cover the cost of returning the container. The US
demand for imports over the last 10 years has made this a steady one way bet, until about 12 months ago according to the the Wall Street Journal.
As the dollar’s slide speeded up and the credit/housing/oil crunch began to impact demand, imports dropped dramatically. Shipping lines promptly switched containers to busier routes elsewhere and container availability began to dry up. As exports have boomed, companies find there are not enough containers to take advantage of opportunities in overseas markets. One scrap dealer in Chesapeake, VA says he could be shipping 2000 containers a month but is only managing 300-400 because he just can’t get his hands on 40ft containers. The situation is not expected to improve before next year.
That’s bad news for the success of US manufacturers taking advantage of their new found export competiveness but may be good news for the domestic metal industry. Scrap shortages both in steel and non ferrous metals have been an acute supply side problem for many domestic producers and has been sighted as one of the primary reasons for finished metal shortages and higher prices particularly among steel mini mills and copper alloy producers. There’s no shortage of demand at home, its just down to price. If it becomes too expensive to export or the containers are just not available then US metal consumers may be the beneficiaries.