7 February 2023 (Lloyd's List) - PRODUCTION of new containers is expected to fall sharply as the easing of congestion at box terminals has led to big improvements in container productivity. “Container availability has been a big issue in the past couple of years, but we’ve seen container productivity begin to improve following the return to pre-pandemic trading levels,” according to Drewry senior analyst John Fossey. He said that availability of container equipment improved sharply from mid-2022, while container liner operators are presently returning many thousands of containers back to their owners as leases expire. “Lessors are now disposing of returned containers via the secondhand container market — we’re seeing a lot of activity and this is having an impact on second hand container prices.” The orderbook to produce new containers peaked to record levels in 2021 when the equivalent of 7.3m teu was manufactured. Production fell 47% last year, with 3.7m teu delivered by global container manufacturers, the majority of which are based in China. “While this was way down it was not a disappointment as it was the fourth highest output of new containers on record,” said Mr Fossey. Large orders from liner operators Ocean Network Express, MSC and Evergreen drove the market in 2022 as they ploughed more of their investment capital in to buying equipment to increase their share of owned containers, a strategy which is ultimately cheaper than leasing. Container manufacturing started to fall significantly in the final quarter of 2022 when only 500,000 teu was delivered. This compares to an average of 1m teu produced in the preceding three quarters. Production volumes for January is understood to be only 53,000 teu with most buyers being traders, rather than leasing companies or liner operators. “The year 2023 could be the worst year on record since 2009 when only 407,000 teu was produced following the global financial crisis,” he said. “We estimate only 700,000 teu will be ordered in what is looking to be a difficult 2023 — we expect to see little activity from leasing companies or liner operators this year as demand returns to normality.” The global pool of containers at the end of 2022 totalled 50.9m teu, up by 2% on the previous year but well below the 13% growth seen in 2021 over 2020. “In 2023 we’re expecting the container fleet to decline by around 3% before starting to grow slowly again from 2024. Fleet replacement is expected to be more important (than growing the fleet) in terms of new container output and we expect a significant number of ageing containers will be retired from the fleet this year.”