Container production reached a post-Covid peak of 521,000 TEU last month, according to Linerlytica. This surge has filled manufacturing slots in container factories until the end of July. Over 4 million TEU of new containers are set to be delivered this year, more than doubling the 1.97 million TEU produced in 2023. This year's production is also a significant jump from the 6 million TEU record set in 2021 during the pandemic's impact on the return of empty containers.
Linerlytica reports that the strong demand has caught the market by surprise, resulting in a shortage of both box equipment and vessels. Carriers such as Maersk are citing capacity losses on the Asia-Europe and Mediterranean routes, although the situation is not as severe as some claims suggest. So far this year, MSC has ordered nearly 400,000 TEU, followed by ONE and Evergreen.
Cosco Shipping Development (CSD), which owns Dong Fang Container, the world’s second-largest box manufacturer, reported a recovery in demand this year. CSD’s net profit for Q1 2024 was $61.91 million, a 12% increase from Q1 2023. This recovery follows a significant 64% drop in net profit last year. CSD Chairman Zhang Mingwen attributed the rapid recovery to the impact of the Red Sea situation.
“Since the fourth quarter of 2023, container shipping has recovered rapidly, due to the impact of the Red Sea situation, which has pushed up container demand to a certain extent,” said Mingwen. “This year, the Red Sea situation has slowed container turnover, the allocation of ships and shipments before Chinese New Year. Due to this, liner operators and shippers are more willing to buy containers. We predict that the demand for new containers and the need to replace old boxes, as well as new container applications will give us a strong foundation this year.”
Despite concerns of significant oversupply, the increased container production and ship deliveries are important in maintaining global container trade. The rerouting of ships via the Cape of Good Hope due to attacks in the Red Sea has required about 10% more capacity to manage global container trades. As ships resume sailings via the Red Sea and the Suez Canal, a significant oversupply may emerge. Between 2019 and 2023, the fleet grew by 21%, while container volumes only grew by 4%. The fleet is expected to grow by another 15% between 2023 and 2025, indicating a potential oversupply shortly.