Shipping containers to post two consecutive years of decline: Drewry
The box pool will decline by 2.6% this year with a further contraction expected in 2024
The global pool of shipping containers is expected to contract in both 2023 and 2024, according to Drewry’s latest report on the container equipment market.
"While stubbornly high levels of inflation in many countries is depressing demand, increasing geopolitical instability is affecting investor sentiment with both factors depressing the growth prospects for world trade. Moreover, shipping lines and lessors, in particular, are ridding themselves of surplus boxes built up in the fleet over the past two years or so, and not replacing equipment being sold into the secondary market," says the update.
The box pool will decline by 2.6 percent this year with a further contraction expected in 2024. "The last time the container pool posted a YoY decline was at the time of the global financial crisis. Between 2008 and 2009, the total number of containers in service dropped from 27.9 mteu to 26.9 mteu, a decline of 3.7 percent."
The most serious oversupply of equipment is in the 40ft high-cube segment because this was the type of box that was in greatest demand in late 2020 and throughout 2021. "In 2021, this size of container accounted for over 85 percent of all dry freight containers produced, and this in a year of record production when in excess of 6.6 mteu were produced. The scale of oversupply means that any equilibrium for 40ft high-cube containers is unlikely to occur before 2025, unless of course there is a sharp turnaround in trade."
Ocean carriers and leasing companies have curtailed their box purchasing programmes considerably in 2023 with the two groups unlikely to take delivery of more than 1.1 mteu of new containers, the update added. "In 2024, Drewry expects a modest recovery to take place in their purchasing plans, largely based on more ageing containers being replaced, and this will increase more strongly in 2025. This is linked to the bulge in container production that took place between 2006 and 2008 when an estimated nine mteu was produced. This equipment is now at the end or nearing the end of its trading life."
The containerised mode is expected to make further inroads into specialised reefer shipping and perishables sectors of the airfreight business, and to take some market share from ro-ro and break bulk vessels when it comes to moving project and out-of-gauge cargo, Drewry says in its report. "This will drive the demand for reefer and special dry freight containers such as open-tops and flat racks. By 2027, Drewry estimates that the global pool of containers will have increased seven percent over the years from 2023."