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While the shipping industry bounces back from the COVID crash, it now faces a sudden shortage of containers. A rush of high-value transpacific imports into the US is pulling sizable amounts of container capacity off of the market. This shortage is not set to subside anytime soon since Chinese container manufacturers, who control 90% of global production, won’t be delivering new orders to some key markets until next year. However, stock prices of container leasing firms are set to continue an ongoing 2020 boom.

Related Stocks: Hapag-Lloyd AG (HLAG), Triton International Ltd. (TRTN), Textainer Group Holdings Ltd. (TGH), CAI International Inc (CAI)

The shipping industry has bounced back over the past few months. Volumes are surging and, as a bonus bit of good news, COVID-19 may not have been as damaging as previously anticipated.

Container volumes may dip just 2% for 2020 compared with early industry-expert forecasts of a 15% slump, according to Rolf Habben Jansen, chief executive officer of German shipping line Hapag-Lloyd AG, which is deploying more capacity now than it did during the build-up to year-end holidays in 2019. Bloomberg writes that container lines are also being boosted by falling prices for bunker fuel, which could help lift Hapag-Lloyd’s full-year profit by almost 50% after it previously forecast a decline of as much as one-third.

Just this month, Moody’s revised the shipping industry’s outlook to stable from negative. The ratings agency also noted that shipping is on course to perform better overall than previously expected this year. They expect the aggregate EBITDA of the shipping companies we rate globally to grow by 3%-5% in 2021, driven by a recovery in the dry bulk segment from pandemic lows and the continuance of good market fundamentals for container shipping.

More importantly, record retail and ecommerce demand is expected to lift all boats across the shipping seas this holiday season.

That optimism does not come without drawbacks, however.

​In particular, shortages of steel shipping containers are driving up freight rates and costs at global ports. The dearth is boosting the purchase price of new containers and lease rates by 50%.

Nico Hecker, director of global container logistics at Hapag-Lloyd, recently noted that “We are currently seeing a ‘black swan’ and are experiencing the strongest increase in 40-foot [container] demand following one of the strongest decreases in demand ever,” Hecker said. “Almost three out of four containers in our 40-foot fleet are currently deployed … and therefore not available.”

Besides the resulting increase in the cost of container leasing, the additional expenses caused by the shortage also add up. Per a interview with a freight forwarder: “The availability of containers is more about ‘how much you are prepared to pay’.” In ocean freight, the additional cost of empty containers skyrocketed from $500 per container to $1,200 per container in three days

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