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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