Empty Shipping Containers “Piling Up” All Over the World
THE return to ‘supply chain normalization’ has led to the container liner industry being hobbled by an estimated surplus of 5 million TEU of boxes, piled high on storage quays and in depots around the world.
Weak consumer demand and consequent easing of supply chain congestion has resulted in an expensive post-boom hangover for ocean carriers, as their equipment storage costs soar at the same time as their freight revenues plummet.
According to Drewry’s latest Container Equipment Forecaster report, the global container equipment fleet grew 2 per cent last year, to 50.9 million TEU, but the consultant expects a contraction of 3 per cent this year.
It says operators will urgently seek to off-hire as many leased containers as possible, while retiring as much of their elderly own equipment as they can, reports London’s Loadstar.
Drewry’s senior analyst for container equipment, John Fossey, said he expected “many thousands” of leased boxes to be returned to leasing companies this year and that, in combination with sales to secondary markets for storage and other uses, a “large part” of the 5 million TEU overhang will have been removed by the year end.
Indeed, the world’s largest container lessor, Triton, with a fleet of 7.1 million TEU, reported an “increase in drop-offs” in the third quarter of last year after “a muted peak season”, and that no doubt would have accelerated in Q4 and in the first quarter of this year.
The second-biggest container equipment lessor, Textainer, also reported “demand decreased significantly” in Q3.
Nevertheless, the leasing companies successfully locked carriers into long-term contracts and extensions of agreements during the equipment crunch periods of 2021 and first half of 2022, so the lines may not be able to return all their surplus equipment without incurring substantial penalties.
However, carriers could decide to pay one-off early-return penalties rather than incur continuing storage charges for equipment they have no bookings for.
Meanwhile, the equipment surplus has seen the cost of a new standard 40ft high-cube container made in China plummet from about US$6,500 at the peak of demand, to less than $3,000.
And second-hand box prices have also slumped, good quality used 20ft containers for storage purposes now widely available in North Europe for $1,000 to $1,500.