With the date for Brexit date fast approaching, there is some reasonable uncertainty in the shipping container marketplace. Customers want to know if it’s a good time to buy now or whether to delay their purchase until after Brexit. In this guide we aim to inform our customers of the challenges and risks the industry faces, and the potential risks to shipping container prices.
Unfortunately without a firm plan, the majority of business are following a reactionary plan, i.e. without the capacity to plan what’s going to happen in advance – there is little that can be planned for ahead of time.
What we can confirm for certain is as follows:
- Shipping Containers will continue to exist post Brexit.
- Goods and trade will still need to flow into the UK (as well as out), meaning that shipping containers will remain on sale in the UK for customers who want one.
A hard Brexit may cause problems with the flow of trade at our borders, but we are working under one major and reasonably obvious assumption. The physical shipping containers are generally much less important to the UK economy than the freight they contain. Taking the most extreme hard Brexit scenarios, with people and freight stuck at our borders – the simple fact is that our government(s) will need to allow for the flow of goods and people across borders or we risk much bigger problems than a lack of shipping containers for sale.
At present we are ensuring that we have stocks to last us at least a few weeks post Brexit, beyond here the flow of goods will need to be back to normal. If not, the supply of shipping containers to purchase for storage use will be a very low priority for everyone. The underlying freight movement will be much more important to the UK’s ability to function.
Shipping Container Prices post Brexit
Underlying shipping container prices are highly likely to remain more or less static through the Brexit period. Shipping containers are a truly international commodity and Brexit or no Brexit, the shipping industry has already suggested this is a relatively minor ‘bump in the road’ for their international operations. The same will go for the supply of shipping containers to these shipping companies.
However 2 key factors drive major changes to container prices:
Steel prices took a circa 20% nosedive at the end of 2018 and appear to have stabilised. If anything they are climbing slightly. Whilst steel prices can be volatile, there is also a circa 3 months lead time from agreeing a price with the factories in China and taking delivery of the goods. This means the cost breaks from the falling steel price are already feeding through into the current marketplace and underlying container prices are very unlikely to chance significantly between March and May 2019.
Containers due to arrive into the UK though the Brexit period have already been built and are on their way so the price (in US$) has already largely been set.
The Price of UK Sterling versus the US Dollar
This often has a quicker and more dramatic effect on prices. In simple terms, when we buy new shipping containers in from China, we pay in US$. 3 months later we sell these in UK sterling.
Very simply, if the price of sterling drops by 10% then you can expect a circa 10% increase in the cost of shipping containers. On the other side if the price of sterling jumps 10%, you can expect a gradual fall in price of a similar amount. These assume there are no other external factors affecting our costs or prices.
Much like petrol prices, prices always seem to raise quicker than they fall. This is no huge surprise when you have a number of companies operating within a marketplace selling on a commodity.
The main point here, is that a change in the UK sterling value will have a direct impact on shipping container costs. If you expect the pound may fall post Brexit, then buying now may be a good idea. If you believe the pound will remain at about the same level, there will be no major impact, and if the pound rises then container prices will drop.
Planning for Brexit if looking to buy a Shipping Container
Our approach is a very simple one. We have stocks saved and reserved that we believe will last us minimum 2 weeks, beyond this if shipping containers are not flowing then UK as a whole (as well as ourselves personally) probably have more to worry about than the lack of shipping containers for sale. If goods cannot get through the borders for more than a period of a few days then we are likely to see food and goods shortages across the board. Our factories won’t be able to operate without a steady flow of goods, our supermarkets may start to show signs of short stocks from goods imported from the EU.
In the event of a full on disaster scenario, shipping containers may be in short supply in the short term or experience a price spike, but they will be back again in the medium to long term. Rest assured thought the process we will be here, happy and able to help with the supply of your shipping containers.
W therefore advise that in all likely eventualities there is unlikely to be a significant short term shift in pricing.
If you are looking to buy a shipping container in the UK for your own storage use, or for an export shipment please feel free to contact us, or you can browse our online range of shipping containers for sale.