10 Feb Weak Demand Sees Accumulation of Empty Containers
As freight levels return to lows not experienced since before the COVID-19 pandemic, there are growing concerns of a container glut across some of China’s busiest ports such as Shanghai and Yantian (Shenzhen).
As orders of manufactured goods from Chinese SMEs and exporters fall, the balance between shipping supply and demand is less than optimal and is impacting container freight levels.
Compounding this issue is the forecasted oversupply of containers, which is predicted to reach 6 million TEUs, due to over-ordering in response to the unprecedented demand levels experienced as a result of the fiscal stimulus policies of the pandemic period.
Furthermore, a large number of new large ships will be delivered during 2023, due to record orders when freight levels hit all-time highs in 2021 and 2022, and this is also expected to result in excess shipping capacity.
This accumulation of empty containers is reflective of a sluggish market as cargo demand has softened, especially in the United States, while congestion, especially in US ports, has eased. This combination, in conjunction with the vast number of new containers over the last two years as well as the older boxes which remained in circulation for longer than their normal lifespans, has resulted in a surplus of empty containers estimated to be approximately 4 million TEUs, and is anticipated to take at least a year until we see a return to normal conditions.
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Rachael Budd & The Transolve Global Team
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