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Shock! The shortage of containers may last until 2022!

Views: 33     Author: Site Editor     Publish Time: 2021-12-24      Origin: Site

At present, the repeated epidemics have made ports inefficient, foreign ports continue to be congested, and the global logistics supply chain is blocked, full of uncertainty.

The distribution of containers is extremely uneven. Facing the situation that one container is hard to find, Maersk, the world’s largest container shipping company, believes that it may not be until the fourth quarter to return to the level before the epidemic. However, some equipment leasing companies believe that it may continue until the fourth quarter. In 2022.

Tim Page, the interim CEO of CAI International, one of the two top-listed leasing companies, said in a conference call with analysts: “The shipping companies have no indication that the tight supply situation they expected has eased. So...for us, the prospects are pretty good, at least until the end of this year, and probably far beyond this time."

At the same time, this year's container output is also rising sharply, and it is expected to increase by 6%-8% this year. So how many containers are controlled by China? In fact, almost all shipping containers in the world are built in China!

According to Drewry, a British maritime consulting company, Chinese factories currently manufacture more than 96% of the world’s dry cargo containers and 100% of reefer containers, and three Chinese companies account for most of the output.

John Fossey, head of container equipment and leasing research at Drewry, believes that as port congestion eases and China is expected to produce a record number of containers this year, the current global container tensions should be eased.

In the 1990s, the container manufacturing industry moved from South Korea to China. Since then, China's market share has been growing and has been dominant in the past 15 years.

According to Drewry's data, in the first quarter of this year, the top three Chinese container manufacturers accounted for 82% of global container production.

CIMC (CIMC) produced 580,000 20-foot standard containers, accounting for 42% of the market share;

Orient International Container Company produced 358,000 TEU, accounting for 26% of the market share;

New Huachang Group CXIC Group produced 200,000 TEU, accounting for 14% of the market share.

Fossey said that from 2017 to the beginning of 2020, container prices have fallen sharply, and manufacturers can only enjoy meagre profits at best. By the end of 2019, the price was only $1,650-1,750/TEU. "

"However, since the outbreak of the epidemic, due to strong consumer demand in the United States and Europe, the price of containers has started to rise. From the end of 2020 until this year, we have seen prices around 3,500 US dollars."

He also added: “Drewry’s research shows that, in principle, there are enough containers in operation to meet the needs of global trade. The problem is that all containers are placed in the wrong place, congestion and containers are in the transportation network. The movement speed is quite slow."

At the same time, China's container production this year is very high-if there are any signs in the first four months of this year, it is that Chinese factories are expected to exceed the 2018 record of 4.4 million TEUs, which is equivalent to a double-digit year-on-year growth.

Fossey believes that when port congestion is finally relieved, effective container supply will increase and China's demand for new containers will fall. He expects that production will slow down in the second half of the year compared with the first half of the year.

The container seems to be a relatively simple device that can theoretically be manufactured in a US factory.

But in fact, in liner companies and leasing customers, American-made containers cannot compete with Chinese-made containers.

One of the issues is steel, which is the most important input in the construction process. Drewry estimates that Corten accounts for about 60% of the total cost of building containers. According to data provided by S&P Global Platts, in the past ten years, the price of hot rolled coil (HRC) in the United States has averaged 28% higher than that in China.

Recently, prices in the United States have soared to nearly twice the price of hot-rolled coil in China.

Other competitive advantages of China include lower labor costs and higher government support, and proximity to the production of refrigerated container machinery.

There is another particularly important advantage of building containers in China: no resettlement costs are required. "Liner companies and leasing companies don't have to spend a lot of money to relocate these containers to areas where there is demand. China is where the goods are produced."

He said: "Adding all these together, China's demand is at the door. It has expertise, has invested heavily in this field, and has produced high-quality containers at very competitive prices. In comparison, You will find that building in China is the best."

Due to the current challenging market situation affecting port activities and causing congestion and shipping delays throughout the supply chain, the 2M Alliance decided to adjust its trans-Pacific West Coast sailing service plans in the United States and Canada to match the actual dates of ships departing from Asia.

MSC, a partner in the alliance, has announced that the voyage numbers of the following services will be adjusted to provide "better schedule reliability."

MSC added that the delay has also affected its Rose (2104E) service and will cancel the following voyages:

At the same time, it was pointed out that because MSC is providing customers with contingency plans for other backup services, customers can continue to make reservations under limited interference.

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