Container equipment prices plunged below building costs in the last quarter of 2018, and manufacturers will need to cut back if they are to return to profit in 2019.
Output of dry container equipment surged in 2018, creating an over-supply that led to a steep fall in prices. Box builders are now struggling to cover their costs, and the likelihood is that they will rein in production in an effort to stem their losses and shore up prices, according to the latest report edition of Drewry’s Container Census, Leasing & Equipment Insight research service. This could have implications for the availability of container equipment in maritime shipping.
A fall in the price of steel might have eased the pressure on equipment manufacturers, but container equipment prices have been falling faster than costs, and the meagre profits of the past couple of years reversed in the fourth quarter, with builders losing $100-200 per box. Meanwhile, Drewry has been downgrading its container shipping demand forecast so production cuts might not do much to raise prices. Taking these factors into account, Drewry expects dry van prices to keep falling and only stabilise in 2020
