Global Scramble Containers has Led to Increasing Demand of PU

PU daily, Shanghai-

COVID-19 epidemic broke out from last year. After that, the epidemic situation in different countries and regions misplaced recovered, leading to the shortage of containers in the international shipping market. From this March to this April, the blockage of the Suez Canal was tantamount to once again “throwing salt on the wound” to the effectiveness of container turnover in the shipping market. According to relevant experts, during the congestion period, about 30 heavy cargo ships passed through the Suez Canal every day, which meant that 55,000 containers were delayed in delivery.

Since the beginning of this year, the epidemic has still recurred or got worse again in some regions of the world, forcing China’s ports with the highest throughput to be closed, and the supply chain, which was in troubled times, has been severely damaged. The situation of “one container is hard to get” and the soaring price of container has aroused market attention.

According to John O’callaghan, head of global marketing and operation of Triton international, one of the two top public container leasing companies in the United States, “Although the factory accelerated container production at the end of last year and the beginning of this year, the inventory level of new containers is still very low, only enough to supply about two to three weeks.”（ It was quoted by Triton during an interview in early May, the same below)

Why is it still not sufficient even if containers are being produced all the time?

CIMC, DFIC and CXIC produced about 80% of the world’s total containers. According to them, production has been rising and is expected to grow by 6% – 8% this year.

According to relevant reports of Dongxing Machinery Research, at present, more than 90% of the containers in the world are supplied by Chinese enterprises. Before the outbreak of the epidemic, the production pattern of China container industry was relatively firm and the supply was abundant. However, due to the impact of the surge in trade volume and the reduction in logistics efficiency last year, there will continue to be demand for containers, especially in Asia and the Americas. Due to the increasing revenue and high rental rate of current leasing contracts, the willingness of container rental companies to purchase containers has increased greatly. From the perspective of the container leasing structure of Textainer, a large number of container contracts will expire in 2021, including about 340,000 TEU for dry containers, 25,000 TEU for refrigerated containers and special containers, all of which are the highest in recent years. A number of container rental companies have an expectation of the container replacement peak in 2021.

Brian Sondey, chief executive officer of Triton, expressed the same view: “this year’s container output growth has lagged behind the market demand for container renewal. Part of this year’s output will be used to make up for the low output in 2019 and the first half of 2020. ” John O’callaghan, Triton’s head of global marketing and operation, added: “it’s still making up for it.”

When asked why leasing companies didn’t lower prices in order to compete for market share, Paige replied, “Because, first of all, container manufacturers don’t do that. They prefer to capture market share by producing more containers. So for leasing companies, in this case, they will choose to seize the opportunity to obtain more containers, and then sell them in the market at a high price. “

Reefer Containers:

The global container shortage has also led to a strong growth in the production and sales of refrigerated containers. According to the traders estimates, in the first half of this year, China production of reefer containers will increase by about 10%.

The most important characteristics of reefer containers are effective thermal insulation and high mechanical strength. Polyurethane foam is commonly applied in the industry to ensure the thermal insulation of reefer containers. When the density of polyurethane foam is 40kg/m3, the thermal conductivity of polyurethane foam is the lowest. In the actual production process, in order to ensure that the polyurethane foam has certain strength, reduce cavitation rate and take into account the leakage during foaming, where the design density is slightly larger than 40kg/m3. The wall thickness is generally between 50-120mm. For special purpose refrigerated containers, the local wall thickness can be reduced to 30mm. A/B system materials are foamed by casting.

CIMC:

According to the report of 2021Q1 released by CIMC, one of the largest manufacturers of reefer containers in China:

Although COVID-19 spread worldwide in 2021Q1, the global economy was recovering rapidly after the vaccination program and the European and American economic relief plan. International trade maintained high visibility and market demand for containers continued to be high. During the reporting period, the operating revenue of container manufacturing business of the group increased significantly, of which the cumulative sales volume of dry containers was 450,800 TEU (164,500 TEU in the same period of last year), with a year-on-year growth of about 174.04%. The cumulative sales volume of refrigerators was 45,900 TEU (25,200 TEU in the same period of last year), with a year-on-year increase of 82.14%.

Maersk (MCI):

A.P. Muller Maersk, the world’s largest shipping company, released its 2021Q1 fincial performance report in early May 2021:

Although COVID-19 is still spreading, and the global supply chain is seriously frustrated, the market demand continues to rise. Affected by this, the company’s performance started exceptionally strong in 2021. All business sectors such as shipping, port services and logistics achieved high revenue and growth. Based on its performance in the first quarter, the company raised its annual performance expectation. “As part of the full year performance forecast for 2021, A.P. Mueller Maersk expects the current special market situation: supply chain bottlenecks and shortage of containers due to the surge in demand will continue until the fourth quarter of 2021, which was expected to last until the first quarter and then return to normal. In line with expectations, the profitability of the first quarter of 2021 is higher than that of the fourth quarter of 2020, which is mainly driven by the growth of China’s exports to the United States (the growth is the highest in the first half of the year). The shipping business is expected to keep in line with the growth of global market demand in 2021, and the growth is expected to increase from 3-5% to 5-7%.”

Then, according to Søren Skou, chief executive of A.P. Mueller Maersk, in the second quarter report of 2021, said: “shaking off the short-term slump and stagnation of early 2020, the reefer container market came roaring back and that growth in demand has continued unabated through the first months of 2021. MCI received more reefer orders by early May 2021 than in the whole of 2020 – and that was a strong year on its own. What we are experiencing less than halfway through 2021 is nothing short of a boom.”

Post time: Jul-08-2021