Container production falls to its lowest level in 14 years, says Drewry Ship’s crew

Global container production is expected to hit its lowest level in 14 years due to stagnant trade and a surplus of shipping containers due to eased pandemic-related supply chain restrictions, according to maritime research and advisory firm Drewry.

In the first quarter of 2023, container production fell by 71% year-on-year with only 306,000 TEUs being produced, the lowest level since 2010. Drewry estimates full-year production will not exceed 1.8 million TEU, the lowest level since the 2023 recession year of 2009.

The situation has been exacerbated by factory closures or reduced working hours in China, the world’s top 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 start until the third quarter of 2023, with production down compared to initial expectations. By 2026, the total capacity of Hoa Phat Group factory in Cai Mep and joint venture factory between Ace Engineering and Seojin Systems in Haiphong is expected to reach 600,000 TEUs per year.

The surplus of containers has resulted in record returns for leasing companies, while shipping companies have discarded obsolete and surplus containers from their fleets. Container owners are prioritizing adapting their equipment pools to current trade and ship supply conditions, as well as removing older or damaged containers that have accumulated during supply chain congestion during the pandemic period.

Drewry expects container decommissioning to reach about 2.8 million TEU in 2023, up year-on-year. Despite high sales in the secondary market, used dry cargo container prices have remained stable and are expected to remain so throughout the year.

As a result, the global container fleet is expected to shrink by 2% in 2023, reaching 49.9 million TEU, the first decline in 14 years. Weak growth of just 1% is expected for global container shipping this year. However, a recovery in freight demand is predicted for the coming years as the global economy gains momentum.

This expected recovery, together with the expansion of the shipping fleet, will lead to increased demand for newly built shipping containers. Drewry’s latest estimates suggest container production will more than double over the next year, ultimately leading to modest growth in the global shipping container fleet.

According to Drewry’s, the fleet is projected to grow at an average annual rate of 2.9% through 2027 Container Equipment Forecast.

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