Drewry expects 2024 to be the second-highest year of dry cargo container production ever, and manufacturers report full order books.
After deliveries reached an all-time high in the second quarter and dry cargo and reefer container production exceeded 850,000 TEU in July, ocean freight carriers and container leasing companies have booked every available production slot with Chinese manufacturers until mid-October.
Due to the longer transit times of liner services as a result of the Red Sea crisis – which requires the deployment of 15 instead of 11 vessels on the Asia-Northern Europe rounds – this situation is a far cry from that of a year ago, when the sector suffered from significant oversupply.
In fact, at that time, it was believed that the global pool of around 55 million TEU was overloaded by around 5 million TEU and that thousands of surplus boxes were lying unused in depots around the world, causing enormous storage and leasing costs.
“In the first seven months of 2024, 1.4 million units were shipped, compared to 125,000 in the same period in 2023, a tenfold increase over the previous year,” Drewry said.
The consultant added that the availability of 40-foot high-cube containers, the “workhorses” of modern container shipping, “has become increasingly scarce as more boxes are needed to transport the same volume of cargo.”
Other factors playing a role this year are the strong export boost from Asia, especially in the second quarter, and the knock-on effects of congestion at major container terminals.
Network operators have been forced to significantly increase their demand for new equipment and put pressure on Chinese manufacturers regarding delivery dates, otherwise they risk losing market share to competitors with better availability of boxes.
In a recent second-quarter earnings call, CEO Rolf Habben Jansen outlined Hapag-Lloyd’s strategy, saying the shipping company was not only forced to charter additional vessels to meet demand and reduce longer transit times, but also spent more than $550,000 on new equipment, one of the largest orders in the company’s history.
“Unfortunately, the turnaround time of the containers is now comparable to pandemic levels, which means that we can use a container less than four times a year,” says Habben Jansen.
In normal times and with careful container control, most transport companies would expect an average utilization of their container fleet of at least five.
Drewry said refrigerated container production also increased in the second quarter, but “the numbers were still in the range we have seen in recent quarters.”
It states: “Reefer tonnage on routes that normally include the Red Sea has fallen by more than 5% year-on-year, well before the onset of the recent supply chain problems.”
Meanwhile, not surprisingly, container leasing companies, which make up around half of the global equipment pool, are benefiting from the sharp increase in demand for boxes.
The largest, Triton, has a fleet of around 7.1 million TEU and said it had booked “over 600,000 TEU for our shipping customers in the first six months of the year, enabling them to fill large supply gaps”. It added that it was enjoying a utilization rate of its container pool of “over 99%”.
