News / Container manufacturers tell customers they are ‘sold out’ until mid-October

Drewry says it expects 2024 to be the second-highest year on record for dry freight container production, with manufacturers reporting full orderbooks.

Ocean carriers and container leasing companies have booked every available production slot until mid-October at Chinese manufacturers after second-quarter deliveries hit an all-time high and July output of dry freight and reefer containers exceeded 850,000 teu.

Driven by the longer transit times of liner services due to the Red Sea crisis – which requires Asia-North Europe loops to deploy 15 ships instead of 11 – it is a far cry from the situation a year ago when the sector was suffering from a substantial oversupply.

Indeed, at that time the global pool, of around 55 million teu, was thought to be some 5m teu overweight, with thousands of surplus boxes laying idle at depots around the world, racking up huge storage and leasing costs.

“In the first seven months of 2024, 1.4m units were delivered, up from the 125,000 in the same period of 2023, indicating a ten-fold surge year on year,” said Drewry.

The consultant added that the availability of 40ft high-cube containers, the ‘workhorses’ of modern day container shipping, “has become increasingly tight, with more boxes needed to move the same volume of cargo”.

Other factors in play this year are the strong export surge from Asia, particularly in the second quarter, and the knock-on effect of congestion at the large container transhipment hubs.

Carriers have been obliged to significantly upscale their requirement for new equipment and pressure Chinese manufacturers on delivery dates, or run the risk of losing market share to rivals with better box availability.

Outlining Hapag-Lloyd’s strategy during a recent Q2 earnings call, CEO Rolf Habben Jansen said the carrier had not only been obliged to charter additional vessels to cope with demand and mitigate the longer transits, but had also spent more than $550,000 on new equipment, representing one of the largest orders in the company’s history.

“The turnaround time of containers is now, unfortunately, quite comparable with pandemic levels, which means we can only use a box fewer than four times a year,” said Mr Habben Jansen.

In normal times, and with judicious container control, most carriers would expect to see average utilisation levels of their container fleet of at least five.

Drewry said the production of reefer containers had also increased in the second quarter, but “the numbers were still in the range we have seen over the last several quarters”.

It noted: “The tonnage of reefer cargo on routes which would normally include the Red Sea fell by more than 5% year on year, well before the start of the recent supply chain issues.”

Meanwhile, the container leasing companies, which account for around half of the global equipment pool, are unsurprisingly benefiting from the surge in demand for boxes.

The largest, Triton, has a fleet of some 7.1m teu and said that, in the first six months of the year, it had “booked over 600,000 teu to our shipping line customers, allowing them to fill major supply gaps”. It added it was enjoying utilisation levels for its container pool of “over 99%”.