As trade stagnates and demand falls below pandemic heights freeing up backlogged freight, the production of new shipping containers has dropped to its lowest level since 2010.
The easing of supply chain constraints has created a “ballooning surplus” of shipping containers, freight analyst Drewry Logistics has found.
While some recovery is expected throughout the year, Drewry’s forecast has predicted the “lowest level [of container output] since the recession-ravaged year of 2009”.
Estimates for box production found the sector’s output contracted 71% year-on-year to 306,000 teu (20ft equivalent unit – a rough estimate of cargo capacity) in the first quarter of 2023 – the lowest levels since the same period in 2010.
The global container fleet is expected to contract 2% this year, marking the first decrease in capacity in 14 years. Container shipping trade is expected to remain weak, Drewry added, but will expand by 1%.
Several container factory closures in China alongside reduced-operation at some facilities, have weighed on expectations. Moreover, production at two new plants in Vietnam is not expected to begin until the third quarter of 2023, with output scaled back far from initial expectations.
Alongside these factors, freight forwarders are taking steps to optimise their container stock. Leasing companies have seen record numbers of box returns, and carriers have disposed of their own fleets’ ageing and surplus units.
Drewry said these were part of attempts to “adjust their equipment pools to better match current trading and vessel supply parameters”, as well as remove the accumulated damaged boxes which piled up as a “consequence of supply chain congestion”.
However, “a recovery in cargo demand is anticipated in subsequent years as the global economy gathers momentum,” it continued.
Earlier this year, Drewry suggested the over-ordering of both inventory by buyers and new capacity by shippers would cause a decrease in demand due to inventory gluts, and a surplus of ships with which to carry it, which would impact inventory management.
Nonetheless, the logistics analyst now predicts that, over the next four years, container capacity will reach an average growth rate of 2.9% annually, thanks to the recovering economy and expanding vessel fleet.
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