Box output down 90% last year but recovery under way
As the container industry begins to recover from the effects of the global financial crisis, the full extent of the precipitous drop in demand for containers last year is revealed in the 2009 annual reports just released by the world’s two biggest manufacturers, China International Marine Containers (CIMC) and Singamas Container Holdings.
According to CIMC, demand for containers last year dropped to one tenth of that of a normal year, with global output falling to around 300,000 TEU. Virtually all standard dry freight container production was suspended between October 2008 and the same month of 2009, with single shift operations only resuming in the latter part of 2009 when demand rose to around 20% of pre-financial crisis levels. As a result, just 200,000 TEU of dry freight boxes were built in 2009 as a whole, down 92% on the 2008 figure.
CIMC puts industry-wide production of reefers in 2009 at 95,000 TEU, down by 57% year-on-year, and says that output of dry freight specials (including regional domestic units) dipped by 60% over the previous year.
For its part, CIMC built 60,400 TEU of standard dry freight containers last year, down by 95.10% on the 2008 figure, 30,400 reefers (down 56.03%) and 43,200 special purpose containers (down 66.53%).
Sales income from the container business in 2009 was RMB5.574B (US$816.4M), down 80.85% year-on-year, with income from dry freight containers, reefers and special purpose containers falling 93.87%, 66.05% and 51.15% respectively.
The huge decline in demand for dry freight containers also saw CIMC’s output of container flooring drop 91.33% year on year, with operating income falling 85.58%.
In the tank container sector, Nantong CIMC Tank Equipment Co, which is now controlled by CIMC Enric Holdings, saw its operating income drop 76.9% last year to RMB584M (US$85.5M).
Looking ahead, CIMC says that with economic recovery under way in the US and Europe, China’s exports will take a dramatic turn for the better in 2010. Container replacement programmes, which were postponed last year, are being resumed and with major container operators opting to introduce slow steaming and increase their vessel numbers, demand for containers in on the rise.
CIMC anticipates that global demand for dry freight containers will exceed 1.5M TEU this year, while demand for reefers and dry freight specials is also expected to pick up.
Meanwhile, Singamas’s 2009 annual report shows that the company manufactured 86,600 TEU last year, down 84.7% on the 2008 figure. Of the total, around 36,299 TEU were higher margin specialised containers and the remainder standard dry freight units.
Revenue from container manufacturing operations was US$237.4M, an 82.4% drop compared to 2008, leading to a loss before taxation and minority interests of US$66.7M compared to a pre-tax profit of US$7.3M a year earlier.
The average selling price of a 20ft dry freight container last year was around US$1,986, while standard tank containers were sold for around US$27,512, in both cases slightly lower than 2008 due to a drop in raw materials prices. With the price of Corten steel predicted to rise gradually in the coming year, Singamas anticipates that average selling prices will rise correspondingly.
Like CIMC, Singamas is anticipating a recovery in demand this year, noting that after eighteen months of global economic downturn, cargo throughput in China is rising and is expected to continue to rise as the improving global economy drives PRC exports and strong domestic consumption stimulates imports.
The rise in global trade will directly benefit the container shipping industry, which in turn will see an increase in demand for new containers, the company says.
Singamas expects the replacement rate for old containers, which has fallen over the past two years, to at least return to the normal rate of 5- 7% in 2010 and believes that business in the first half of 2010 will grow and improve steadily, establishing a momentum that should lead to a positive second half year.
The company started rehiring workers after the Chinese New Year holiday in preparation for a ramping up of production capacity as demand increases.
Source : World Cargo News