Box lines try to reduce their bloated gear pools

Super slow steaming takes some of the pressure off shipping lines as they integrate newly built ULCVs into existing supply circuits, but their excess equipment proves to be more of a challenge.

Shippers, faced with huge inventory bills from depots around the world because of their huge inventories of empty containers, are trying to sell aging owned containers onto the used market and return as much equipment as possible to leasing companies.

But both strategies strain the skills of their equipment inspectors, as the used market is itself awash with excess equipment, while leasing companies have unexpired leases of about five years on average.

While chronic port congestion during periods of high demand in 2021 and the first half of 2022 absorbed an estimated 15% more tonnage, a vicious cycle of shoreside congestion, full depots and overcrowded empty stacking areas at terminals hampered the repositioning of Asia’s container flow.

To compensate for this artificial shortage of equipment, the transport companies rented more containers and ordered new boxes.

However, with the removal of supply chain congestion, shipping companies are now looking to rationalize their equipment fleets to pre-pandemic levels or just above, reflecting the normalization in demand.

In addition, with freight rates on major trade routes being around 80% lower, shippers are fully focused on cost cutting, with reducing overweight container pools as a key objective.

Meanwhile, the latest assessment of Drewry’s container equipment found container production is expected to fall to its lowest level in 14 years.

“Stagnant trade and a skyrocketing surplus of shipping containers as a result of the easing of pandemic-era supply chain restrictions have led to a slump in newbuild container production,” Drewry said.

The consultant said several container factories in China are either closed or operating at significantly reduced levels.

In addition, Drewry said production at two new sites in Vietnam with a production capacity of 600,000 TEUs per year, which was planned during the chronic equipment shortage that disrupted supply chains two years ago, is only expected to start container production now in the third quarter of this year.

Elsewhere, leading container leasing company Textainer said that newbuild production “has declined significantly in light of low demand and most container factories are expected to remain closed through the second quarter.”

drewrys Container Equipment Forecast estimates that global cartonboard production fell 71% year-on-year to 306,000 TEU in the first quarter, the lowest level since the same period in 2010.

“While some recovery is expected for the remainder of the year, full-year production is not expected to exceed 1.8 million TEU — the lowest level since recession-hit 2009,” Drewry said.

The global equipment inventory is forecast to fall 2% this year to 49.9 million TEU, the first drop in 14 years.

Still, Drewry is more optimistic about a return to growth for the sector in 2024 and beyond, given the huge backlog of newbuild tonnage delivered, and said he expects manufacturing output to double over the next year.

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