Production of shipping containers will fall to a 14-year low in 2023, following a 71% decline in the first quarter. Are falling production numbers a sign of longer-term declining demand, or a simple realignment after extraordinary circumstances brought on by COVID logistical snags? Sam Chambers reports in Splash 247:
Stagnating trade and a ballooning surplus of shipping containers, following easing of pandemic era supply chain constraints, has led to a collapse in newbuild container output, which is forecast by UK consultants Drewry to slump to its lowest level in 14 years.
Drewry estimates that global box production contracted 71% year-on-year to 306,000 teu in the first quarter of 2023, the lowest level since the same period of 2010. While some recovery is anticipated through the remainder of the year, full-year output is not expected to exceed 1.8m teu, the lowest level since the recession-ravaged year of 2009, according to Drewry’s Container Equipment Forecaster.
Currently, several factories in China are either closed or operating on significantly reduced working hours, with full-scale production expected to commence in June. Meanwhile, commercial production at two new plants in Vietnam is not expected to start before Q3 this year with output scaled back from original expectations. The Hoa Phat Group factory in Cai Mep and the joint venture plant between Ace Engineering and Seojin Systems in Haiphong together will have the capacity to produce 600,000 teu a year by 2026.
Meanwhile, this year has seen record returns of containers to leasing companies, while carriers have been busily disposing of ageing and surplus boxes in their owned fleets. Currently, the priority for most container owners is to adjust their equipment pools to better match current trading and vessel supply parameters, and to remove ageing or damaged boxes that have accumulated as a consequence of supply chain congestion over the period of the pandemic.
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