Supply chain signals: New-container prices and production finally peak

There are some interesting statistics here about container production. The graph shows the price of new containers is dropping. Drewry estimates production this year will be somewhere around 4.5 million TEU, 70% of which is 40-foot containers. American companies are also buying 53-foot containers in China and shipping them to the US, where they are legally used on the road.

Price of new containers per TEU. Chart by Triton. Source: American Shipper.

Most containers are built in China. 80% of all new containers are built by three state-supported Chinese factories.

One of the issues no one is addressing is the buildup of ‘container waste’. So many containers are being built now because the need is in China, and it’s costly to transport the empty containers overseas. When the explosion of demand subsides, and we can see that might be starting, there will be less need for empty containers.

So where will the empty containers be? Piling up in the container yards in ports and warehouses in the US. The containers are expensive to ship back to China for reuse, particularly because of chartering costs. Adding ship capacity for empty containers is not a winner for ocean carriers when they can be built in China.

Container waste in certain locales is probably going to be a problem in places in the US where there is an excess of importing. The US does not export enough, even if we somehow increase the agricultural exports in containers, currently around 10% for some crops like soybeans. Those containers have to be stored or sold for houses or storage, or scrapped for the steel. China is ‘dumping’ steel on us again, but in the form of fabricated products— containers.

Now that land transport costs are escalating, it is starting to be costly to transfer empty containers on land in the US. That reduces the possibility of shifting them to an exporter’s location for loading.

Quite a conundrum. The container trade is bumping up against some sustainability issues other than smokestack emissions.

One response to “Supply chain signals: New-container prices and production finally peak

  1. Pingback: Supply chain signals: New-container prices and production finally peak

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