GLOBAL production of shipping containers has fallen significantly as demand for goods sank following the easing of pandemic restrictions, leaving the corrugated steel boxes piled up at major ports, reports London's Financial Times.
Figures provided by Drewry, a maritime research consultancy, show that production of TEU fell 71 per cent from 1.06 million to 306,000 between the first quarter of 2022 and the same period this year. The decline marks a sharp reversal from two years ago, when container manufacturing boomed in response to a pandemic-induced surge in demand for physical goods which led to a shortage of the rectangular boxes. However, demand for exports has waned since restrictions eased and economies have reopened, leaving the shipping industry with a surplus of containers that threatens to overwhelm ports in China, where up to 95 per cent of the world's boxes are produced.
AP Moller-Maersk, one of the world's largest shipping conglomerates, has said it is halting production of dry containers until at least 2024, though it said it might resume building 20ft boxes sooner than its larger 40ft versions as the demand for the former appeared to be more resilient. Anne-Sophie Zerlang Karlsen, Maersk's head of Asia-Pacific customer delivery, told the FT the company was also seeking to sell or scrap more of its older boxes to take advantage of the glut.
The drop-off in demand has hit manufacturers hard. Profits at China International Marine Containers, one of the country's largest producers of the boxes, plunged 91 per cent year on year to CNY160 million (US$23 million) in the first three months of this year. Sales of standard containers dropped 77 per cent during the period, the Shenzhen-headquartered company said, blaming a "continuous decline in the container trade and an insufficient demand for new containers".
Profits at Cosco Shipping Development, the container manufacturing arm of state-owned shipping group Cosco, dipped 71 per cent in the first quarter of this year to CNY398 million.
World Trade Organization economists believe export growth will stutter for the duration of this year, suggesting that demand for containers would remain weak. The latest WTO forecasts estimate a boost to trade in goods of just 1.7 per cent this year, down from 2.7 per cent growth in 2022. In 2021, global production reached 7.1mn standard-sized containers, more than double the output in 2020, according to Drewry.
Now demand has fallen so greatly that port owners in the region face the fresh problem of having to find space for record volumes of unused boxes.The availability of boxes at Shanghai, the world's largest container port, has been higher this year than during the spring lockdown of 2022, according to analysis firm Container xChange. However, Michael Fitzgerald, deputy chief financial officer at the Hong Kong-listed shipping group Orient Overseas Container Line (OOCL), said earlier this month that the glut at Chinese ports had eased "over the past few weeks".