'Container shortage worsening'

'Container shortage worsening'

SINGAPORE (Dow Jones): Rubber traders in Indonesia, the world's second-largest natural rubber producer after Thailand, said yesterday they are increasingly concerned about the lack of containers to ship the commodity.

Indonesian rubber exporters have faced a severe shortage of containers and shipment delays since early April as a result of an imbalance between heavy exports and reduced imports, traders said.

"The problem is still unsettled and it's getting worse," said a Medan-based trader. "About a week ago, we still had three shipments. But we'll have to stop (shipping rubber) this week and we don't know when it can resume."

Some liners have increased freight rates from the usual US$150-$160 per container to $200, traders said.

To cope with the problem, some exporters have resorted to using the more costly and fragile conventional means by which goods are packed in a covered box rather than a solid container, traders said.

Although freight rates are similar between shipping by containers and by conventional means, exporters incur much higher loading fees in the latter case.

While the loading fee for containers is Rp 2,000 - Rp 3,000 per kilogram , it costs up to Rp 7,000 - Rp 8,000 (about US$1) for conventional means, said the Medan-based trader.

Shipping through conventional means is also considered less efficient than using containers, traders said.

"Conventionals are only good for shipping to the Middle East, India, or China, but not Europe," said another Medan-based trader.

It normally takes 20 to 25 days to ship with containers from Belawan, North Sumatra to European ports such as Amsterdam in the Netherlands and Genoa in Italy, shorter than the 30 days by conventional means, he added.

"Import is far less than export. I think that's the bottleneck,' said a Medan-based senior executive with a major rubber processor-exporter. "We have no money to import anything now."

"I don't think the problem will be solved easily," said the second Medan-based trader. 'Maybe as soon as Indonesia gets the IMF loan,' things may turn for the better.

On Monday, the International Monetary Fund approved a $1 billion outlay to Indonesia after a delay in the release of the second $3-billion tranche of a $43-billion economic reform package.