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Economic Forecasts

Box Shortage Causing Ocean Shipping Woes to Linger

A dearth of ocean cargo containers is stymieing efforts to ramp up exports and imports.

Shortages of ocean containers will continue into the second half of 2011, causing headaches for importers and exporters.

Chinese manufacturers, which control the lion’s share of the box market, will take until then to ramp their production back up to its prerecession rate. They all but shut down in 2009, when the recession scuttled ocean shipping. Production is increasing slowly, but won’t approach the prerecession rate of about 4 million containers annually until the second half of next year.

Moreover, cargo lines that stretched delivery times between the U.S., Europe and Asia to save fuel and cash still face thin profit margins and tough emissions rules. The extra days at sea tie up thousands of containers.

It’s unlikely that steamship lines will speed up most shipments again soon, since carriers are still trying to turn the corner to profitability. Many ocean carriers are under pressure from their home nations to reduce ships’ fuel emissions, and the easiest way to do this is to move slower.

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Delays are hammering firms that rely on precision import deliveries of machinery, electronic components, semifinished metals and parts plus textiles. They’ll have to beef up warehousing to guard against supply shortfalls, hiking procurement budgets and inventory carrying costs.

Hardest hit: Exporters based 100 miles or more inland from ports. Midwestern firms, notably makers of high-end machinery, will take it on the chin. Ocean carriers aren’t keen to restore costly services that routinely used railroads to ship empty containers cross-country.

Companies may need to enlist brokers to find boxes or to truck products to ports where containers are more readily available.