Global container production falls as freight demand slows

Global production of shipping containers has fallen significantly as demand for goods slumped after the easing of pandemic restrictions, causing corrugated steel crates to pile up at major ports.

Figures provided to the Financial Times by Drury, a maritime research consultant, show that production of 20-foot equivalent units – the industry’s standard size for a container – fell 71 per cent from 1.06mn to 306,000 between the first quarter of 2022 and Went. period of this year.

The decline is a sharp reversal from two years ago, when a boom in container manufacturing in response to a pandemic-induced surge in demand for physical goods led to a shortage of rectangular boxes.

However, export demand has eased as restrictions are eased and economies reopen, leaving the shipping industry with a surplus of containers that threatens to overwhelm ports in China, where the world 95 percent of the boxes are produced.

A.P. Moller-Maersk, one of the world’s biggest shipping groups, has said it is halting production of dry containers until at least 2024, although it said it would be producing 20ft boxes sooner than its larger 40ft versions. Construction may resume as pre-demand is visible. be more flexible

Maersk’s head of Asia-Pacific customer distribution, Anne-Sophie Zerlang Carlsen, told the FT that the company was also looking to sell or scrap its old boxes to take advantage of the glut.

The fall in demand has dealt a severe blow to the manufacturers. Profit at China International Marine Containers, one of the country’s biggest producers of boxes, plunged 91 percent year-on-year to Rmb160mn ($23mn) in the first three months of this year.

The Shenzhen-headquartered company reported a 77 per cent decline in sales of standard containers during the period, attributing it to “a continued decline in container business and insufficient demand for new containers”.

State-owned shipping group Cosco’s container manufacturing arm Cosco Shipping Development’s profit fell 71 per cent to Rs 39.8 crore in the first quarter of this year.

Economists at the World Trade Organization expect export growth to stall for the duration of this year, suggesting that demand for containers will remain weak. The latest World Trade Organization forecast, last month, is forecast to boost trade in goods by just 1.7 percent this year — down from 2.7 percent growth in 2022.

Container shipping lines are already facing a sharp drop in profits after a record period of earnings during the COVID-19 lockdown, when supply chain disruptions – along with a jump in freight demand – pushed up shipping costs .

The surge left shipping groups scrambling to stock up on new containers after pandemic-induced bottlenecks at many ports left a shortage of boxes to ship goods from Asia.

According to Drewry, global production is set to reach 7.1 million standard-size containers in 2021, more than double the production in 2020.

Now demand has fallen so much that port owners in the region are faced with the new problem of finding space for a record amount of unused boxes.

Carlson said stockpiles are now at record levels across the Asia-Pacific region.

She said the “lion’s share” of units in storage were 40-foot-tall cube containers largely used in the Asia-Europe and Asia-US markets, resulting in weaker demand on those routes. At the same time, over the past month there was a shortage of 20 ft dry containers, which were in demand in markets such as Latin America and Africa.

According to analysis firm Container Exchange, box availability at the world’s largest container port Shanghai has been higher this year than it was for the spring lockdown of 2022.

However, Michael Fitzgerald, deputy chief financial officer at Hong Kong-listed shipping group Orient Overseas Container Line, said earlier this month that volumes at Chinese ports had decreased “over the past few weeks”.

Global production of shipping containers has fallen significantly as demand for goods slumped after the easing of pandemic restrictions, causing corrugated steel crates to pile up at major ports.

Figures provided to the Financial Times by Drury, a maritime research consultant, show that production of 20-foot equivalent units – the industry’s standard size for a container – fell 71 per cent from 1.06mn to 306,000 between the first quarter of 2022 and Went. period of this year.

The decline is a sharp reversal from two years ago, when a boom in container manufacturing in response to a pandemic-induced surge in demand for physical goods led to a shortage of rectangular boxes.

However, export demand has eased as restrictions are eased and economies reopen, leaving the shipping industry with a surplus of containers that threatens to overwhelm ports in China, where the world 95 percent of the boxes are produced.

A.P. Moller-Maersk, one of the world’s biggest shipping groups, has said it is halting production of dry containers until at least 2024, although it said it would be producing 20ft boxes sooner than its larger 40ft versions. Construction may resume as pre-demand is visible. be more flexible

Maersk’s head of Asia-Pacific customer distribution, Anne-Sophie Zerlang Carlsen, told the FT that the company was also looking to sell or scrap its old boxes to take advantage of the glut.

The fall in demand has dealt a severe blow to the manufacturers. Profit at China International Marine Containers, one of the country’s biggest producers of boxes, plunged 91 percent year-on-year to Rmb160mn ($23mn) in the first three months of this year.

The Shenzhen-headquartered company reported a 77 per cent decline in sales of standard containers during the period, attributing it to “a continued decline in container business and insufficient demand for new containers”.

State-owned shipping group Cosco’s container manufacturing arm Cosco Shipping Development’s profit fell 71 per cent to Rs 39.8 crore in the first quarter of this year.

Economists at the World Trade Organization expect export growth to stall for the duration of this year, suggesting that demand for containers will remain weak. The latest World Trade Organization forecast, last month, is forecast to boost trade in goods by just 1.7 percent this year — down from 2.7 percent growth in 2022.

Container shipping lines are already facing a sharp drop in profits after a record period of earnings during the COVID-19 lockdown, when supply chain disruptions – along with a jump in freight demand – pushed up shipping costs .

The surge left shipping groups scrambling to stock up on new containers after pandemic-induced bottlenecks at many ports left a shortage of boxes to ship goods from Asia.

According to Drewry, global production is set to reach 7.1 million standard-size containers in 2021, more than double the production in 2020.

Now demand has fallen so much that port owners in the region are faced with the new problem of finding space for a record amount of unused boxes.

Carlson said stockpiles are now at record levels across the Asia-Pacific region.

She said the “lion’s share” of units in storage were 40-foot-tall cube containers largely used in the Asia-Europe and Asia-US markets, resulting in weaker demand on those routes. At the same time, over the past month there was a shortage of 20 ft dry containers, which were in demand in markets such as Latin America and Africa.

According to analysis firm Container Exchange, box availability at the world’s largest container port Shanghai has been higher this year than it was for the spring lockdown of 2022.

However, Michael Fitzgerald, deputy chief financial officer at Hong Kong-listed shipping group Orient Overseas Container Line, said earlier this month that volumes at Chinese ports had decreased “over the past few weeks”.