Maritime and shipping industry research and consulting service Drewry has predicted a decline in the production of shipping containers for the second consecutive year. The decline follows a massive drop in container production in 2022 due to sluggish growth in consumption caused by increasing consumer prices. However, the sector is expected to receive a slight boost following the easing of congestion at ports and across supply chains in general. The output of new containers in 2022 was considerably less than the record 7.13 million TEUs produced in 2021. The number of TEUs produced in 2022 was 3.77 million, representing a 47% fall from the previous year.

Drewry’s Senior Analyst for Container Equipment Research, John Fossey, has warned that container production is expected to decline even further in 2023 as the market is currently oversupplied. Owners of equipment are having to deal with the oversupply that has built up in the market, which is expected to negatively impact production. According to Fossey, container production is forecast to range from 4-5 million TEUs a year between 2024 and 2026.

Fossey added that container leasing companies have cut their capital budgets significantly as a result of uncertain trading prospects and concerns over how much the fleet could increase since 2020. The first month of 2023 saw only 53,000 TEUs produced, suggesting that another decline in production can be expected.

Despite the decline, Fossey notes that the figure is not entirely disappointing, considering it was the fourth-highest year on record for container output. During the first half of 2022, there was robust demand for container equipment, particularly from ocean carriers. Liners were flush with cash and opted to invest in buying equipment rather than increasing leases, which are more expensive in the long run.

Fossey expects shipping lines to retire a large number of ageing containers in 2023 without replacing them. The current oversupply of equipment in the pool is estimated to be as much as five million TEUs. Both ocean carriers and leasing companies are disposing of these boxes into the secondary market.

Drewry forecasts that demand for reefers will exceed that of dry freight this year due to the extra traffic being provided by the pharmaceutical and medical sectors to the traditional perishable sector. Demand for tank containers is also expected to remain bullish.

Overall, Drewry is expecting one of the worst years for container production on record for manufacturing activity, with output forecast at only 700,000 TEUs. The last time this happened was in 2009 during the global financial crisis, when production was only 407,000 TEUs.