A record year for container production, will the shortage of containers be short of the end of the year? ! Approximately 1.4 million TEUs of new boxes delivered in the first quarter

The global shipping system is currently experiencing a unique and unexpected crisis. A series of unusual events triggered by the epidemic led to a serious container shortage crisis.

Starting from the middle of last year, due to the imbalance of import and export containers, a large number of empty containers could not be recycled, and the cost of new containers continued to rise. The shortage of containers seemed to have not passed until the second quarter of this year, and it might even last until the end of the year.

According to a well-known consulting agency, although the number of container deliveries in 2021 may break records, the global container availability crisis is unlikely to ease before the end of the year.

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John Fossey, senior container analyst at Drewry Shipping Consultants, a Drewry Shipping Consultants, said that the delivery of new containers in the first quarter of this year was approximately 1.4 million TEUs, an increase of about 10% over the fourth quarter of last year and an increase of 21% over the first quarter of last year. %.

"Based on current production activities, we believe that the annual output of 2021 may exceed 4.7 million TEUs. This will be a record year for container production, exceeding the 4.42 million TEUs in 2018, an increase of 52% from the 3.1 million TEUs delivered last year. ."He says.

According to the calculations of Textainer, the cost of dry containers in 21Q1 is 3500-3600 US dollars/TEU, while the steel cost is only 750-800 US dollars/TEU. The increase in container prices far exceeds the cost of steel, and the gross profit margin of containers will exceed the 2011 high and reach more than 20%.

In addition, the inventory of container manufacturers has reached a new low for the second consecutive quarter, and the shortage of containers is more tense than the peak of the last round of container building. In 20Q1, the inventory of dry cargo container manufacturers was 171,000 TEU, which was a record low after 20Q4 with 205,000 TEU.

With the strong demand for container transportation, the utilization rate of container leasing companies hit a record high. In the second half of 2020, Textainer's rental box utilization rate hit a record high, reaching 98.5% in 20Q4, and will continue to increase to 99.5% in February 2021.

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Nevertheless, Fossey believes that this is unlikely to alleviate the severe container shortage faced by many shippers and freight forwarders around the world.

“The shortage may continue until the end of this year, and the shortage of containers is due to the shipping company’s response to the epidemic. First, the initial suspension of flights, and secondly, to meet unexpected demand, the carrier has deployed larger ships and additional loading ships. This created a vicious circle of congestion in the port.

"In response to this kind of congestion, shipping companies have begun to stop operations at the port, which means that no cargo is loaded, which will only increase the congestion in the port."

Fossey explained: "It is easy for shipping companies to increase capacity, but it is far from easy for ports. Inland transportation industries such as railways and freight are struggling to cope with absenteeism and reduced labor productivity, which makes customs clearance. It becomes more difficult.

"Obviously, the whole year will be affected by port congestion, and the turnover time of containers needs to return to the level before the epidemic, but this will not be possible until the end of this year and 2022."

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But he added: "In other words, Drewry believes that there are enough containers in the fleet to support trade and its growth, but the containers are placed in the wrong place."

At the same time, the demand for new containers continues to soar, not just to meet demand. Generally speaking, the service life of a container is 15 years, and a large number of boxes delivered between 2005 and 2009 are close to their service life.

"In the late 2000s, a large number of containers were manufactured. Replacement will continue to order container until 2025. Approximately 45% of the orders placed this year are for container replacement, but by next year and beyond, this proportion will rise to more than 60%. "Fossey said: "By 2025, the annual output will still exceed 4 million TEUs."

As a result, the price of new containers is unsurprisingly high-the average price of a 40-foot high cubic container (HC) in the first quarter of this year was US$6,160, which is about 90% higher than the same period last year.

Tight production capacity has also led shipping companies to agree to longer lease terms with container leasers. Fossey pointed out that leasers usually agree on lease terms of 9 to 10 years.

"In one case, we learned that the two parties have agreed on a 15-year lease term, and we believe that we will continue to develop in this direction, which means that more and more new containers are likely to be in their entire life cycle. Under a single lease," he said.