Container Production in Q1 Down 71% YoY
WTO "Goods Trade Growth Rate 2.7% Last Year → 1.7% This Year"
This year, as signs of a global economic slowdown emerged, the production of containers used to transport import and export goods sharply declined. With the shipping industry, a barometer of the economy, struggling to recover, gloomy forecasts suggest that the global economic recession will continue for the foreseeable future.
On the 23rd (local time), according to Drewry, a British maritime consulting firm, the production of 20-foot containers, the industry standard size, recorded 306,000 units in the first quarter of this year. This represents a 71% decrease compared to 1.06 million units in the same period last year.
This is analyzed as a consequence of reduced global trade amid heightened concerns over economic recession due to high-intensity tightening policies and rising prices in major countries including the United States. Compared to two years ago, when container manufacturing thrived due to a surge in demand for goods caused by movement restrictions during the COVID-19 pandemic, conditions in the shipping industry have changed significantly. Shipping freight rates, which can be considered an economic barometer, have also struggled to recover. The Shanghai Containerized Freight Index (SCFI) recorded 972.45 as of the 19th, plunging 76.6% from 4,147.83 a year ago and 70.9% from 3,343.34 two years ago.
The biggest concern in the container industry is the accumulation of inventory. According to Drewry, global container production in 2021 reached 7.1 million units based on the industry standard size, doubling the previous year. Due to oversupply, inventory has piled up to the point where even container storage space is now insufficient. Ann Sophie Jørgensen Carlson, Maersk's Asia-Pacific head of customer delivery, said, "Container inventory in the Asia-Pacific region is currently at record levels," adding, "We will see large volumes of containers piled up at ports throughout this year." Maersk, the world's second-largest shipping company, has decided to halt the production of new containers until 2024 due to inventory issues. Their plan is to quickly sell off existing stock or, if that proves difficult, to scrap them.
The worsening market conditions have also significantly reduced the earnings of container manufacturers. China International Marine Containers (CIMC), one of China's largest container producers, reported a profit of 160 million yuan in the first quarter of this year, a 91% drop compared to the same period last year. The company explained, "Container trade is continuously declining, and demand for new containers is insufficient," noting that "sales of standard containers fell by 77% during this period." Another Chinese shipping company, COSCO Development, also saw its first-quarter profit shrink by 71% to 398 million yuan.
With growing concerns over a recession in the United States, global trade is likely to contract further. The World Trade Organization (WTO) forecasts that the growth rate of merchandise trade will be 1.7% this year, a significant slowdown from 2.7% last year. This is a poor figure compared not only to last year but also to the 12-year average growth rate of 2.6%. The International Monetary Fund (IMF) also expects the global import growth rate to fall from 4.7% last year to 2.4% this year. The shipping industry has even raised negative forecasts suggesting that first-quarter results could be better than the traditionally strong second and third quarters.
This sluggish trade could lead to a vicious cycle that further hampers global economic recovery. One foreign media outlet reported, "Due to reduced demand for goods following the easing of pandemic restrictions, global container production is also significantly decreasing," adding, "Steel boxes are piling up at major ports."
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