There are now too many containers in the world. And they are cluttering up the ports and yards we need to move containers through. And they cause detention and demurrage charges, because lines won’t move them out of ports.
The global container pool is around 50 million TEU right now. According to Drewry, that is an excess of 6 million TEU. However, Drewry is not too concerned about the excess at present, feeling they can be absorbed if trade picks up. Interestingly, Drewry seems to think that the excess will be absorbed by ‘slower sailing’!
As economics tells us to expect, the price of second-hand containers is falling. However, some carriers, such as Evergreen, continue to order more. Most containers are built in China these days. Three Chinese firms, with state connections, are the primary sources. The problem is that empty used containers cost a lot to return to exporting destinations. They displace paying cargo, forcing ocean carriers to use space to carry them. And especially, with the cost of bunker fuel in the stratosphere, and the need to use very low sulfur fuel in some busy port areas, the transportation cost is high. Ocean carriers have to ‘bundle’ the cost of returns into the one-way cost of the loaded shipment. Either that, or they take a hit by moving the old containers back.
The Seatrade article by Gary Howard has nice graphs showing the average price of 40-foot used containers in Europe, and in China, provided by Container xChange. Again the question of where excess containers will be stored is raised. There haven’t been many answers to that one yet.
By Martina Li in Taiwan 19/07/2022
Container glut pushes down second-hand prices, but carriers still ordering new – The Loadstar
Gary Howard | Jul 19, 2022
6m teu oversupply of containers after ‘reactionary’ ordering
Supply Chain and Logistics 