Trade stagnation and an excess of shipping containers due to the easing of pandemic-related supply chain constraints, have caused a significant decline in the production of new shipping containers. UK consultants Drewry predict that container output will reach its lowest point in the last 14 years.
In the first quarter of 2023, global box production decreased by 71% compared to the previous year, reaching 306,000 twenty-foot equivalent units (teu). This is the lowest level since 2010. While some recovery is expected later in the year, the total annual output is projected to be no more than 1.8 million teu. This would be the lowest level since the recession-hit year of 2009, as stated in Drewry’s Container Equipment Forecaster.
At present, several factories in China are closed or operating with reduced working hours. Full-scale production is expected to resume in June. Additionally, two new plants in Vietnam, owned by the Hoa Phat Group and a joint venture between Ace Engineering and Seojin Systems, are not anticipated to begin commercial production until the third quarter of this year. Their output has also been scaled back from initial expectations. By 2026, these facilities are projected to have the capacity to produce 600,000 teu per year.
Furthermore, leasing companies have experienced record returns of containers, while carriers have been disposing of older and surplus containers from their fleets. The main priority for container owners is currently adjusting their equipment pools to match the current trading and vessel supply conditions, as well as removing aged or damaged containers that accumulated during the supply chain congestion caused by the pandemic.
Drewry estimates that around 2.8 million teu of containers will be retired in 2023, similar to the previous year. Despite the high number of containers being sold in the secondary market, prices for used dry freight containers have remained stable and are expected to remain so throughout the year.
Consequently, the global container fleet is predicted to shrink by 2% this year, reaching a total of 49.9 million teu. This will be the first decline in 14 years. The global container shipping trade is expected to show weak growth of just 1% in 2023. However, a recovery in cargo demand is anticipated in the coming years as the global economy gains momentum.
This, combined with an expanding vessel fleet, will drive an increase in demand for new shipping containers. According to Drewry’s latest assessments, container output is expected to more than double next year. This will result in modest growth for the global shipping container fleet, with an average annual growth rate of 2.9% projected until 2027.
