Global container production is set to reach its lowest level in 14 years due to stagnating trade and a surplus of shipping containers caused by eased pandemic-related supply chain constraints, according to maritime research and consulting firm Drewry.
In the first quarter of 2023, container output contracted by 71% compared to the previous year, with only 306,000 TEUs produced, marking the lowest level since 2010. Drewry estimates that full-year production will not exceed 1.8 million TEUs, the lowest since the recession-hit year of 2009.
The situation has been exacerbated by factory closures or reduced working hours in China, the world’s leading container producer, although full-scale production is expected to resume in June. Additionally, commercial production at two new plants in Vietnam is not expected to commence until the third quarter of 2023, with reduced output compared to initial expectations. By 2026, the combined capacity of the Hoa Phat Group factory in Cai Mep and the joint venture plant between Ace Engineering and Seojin Systems in Haiphong is projected to reach 600,000 TEUs per year.
The surplus of containers has led to record returns to leasing companies, while shipping carriers have been disposing of aging and excess containers from their fleets. Container owners are prioritizing the adjustment of their equipment pools to match current trade and vessel supply conditions, as well as removing older or damaged containers accumulated during the supply chain congestion of the pandemic period.
Drewry anticipates that retirements of containers will reach approximately 2.8 million TEU in 2023, matching the previous year. Despite high levels of disposals in the secondary market, prices of used dry freight containers have remained stable and are expected to continue so throughout the year.
Consequently, the global container fleet is forecast to contract by 2% in 2023, reaching 49.9 million TEUs, marking the first decline in 14 years. The global container shipping trade is expected to see weak growth of just 1% this year. However, a recovery in cargo demand is predicted in the coming years as the global economy gains momentum.
This expected recovery, coupled with the expansion of the vessel fleet, will drive increased demand for newbuild shipping containers. Drewry’s latest assessments suggest that container output will more than double next year, ultimately leading to modest growth in the global shipping container fleet.
The fleet is projected to expand at an average annual rate of 2.9% until 2027, according to Drewry’s Container Equipment Forecaster.
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