Photo: Dong Fang International Container
Cosco Shipping Development (CSD), parent company of the world’s second largest container maker, Dong Fang International, says it is seeing a drop in demand and daily rental rates.
Demand for containers has surged over the past 18 months, seeing 2021 net profits nearly triple from 2020 to $956 million, as pre-tax profits from box sales jumped 21-fold from a year-on-year at $1.04 billion, while CSD received orders for 1,645,000 teu, nearly double the 866,000 TEUs ordered in 2020.
Cai Lei, secretary of the board of directors of CSD, said: “Due to the huge volume of container manufacturing last year, there will be a corresponding decrease this year, but it is a decrease. constant, not a free fall.
“We are now in the second quarter and continue to receive orders for containers, the unit price of which is still around the historically high level of $3,000.”
He admitted that although daily container rental rates had fallen from a record high of $1.40 to $1, it was still double the low of $0.50.
Cai noted that there are still many factors driving container demand this year, with 5% of containers being replaced every year and some liner operators and box rental companies delaying container scrapping. over the past two years due to high demand. The increase in vessel size, particularly the increase in shipbuilding orders from 7,000 to 8,000 teu, will also boost container demand, he said.
The entire 3.7 million TEU container fleet owned by CSD is leased, 95% of which on contracts of three to five years. This year, about 400,000 TEUs are to be redelivered to CSD, and Cai said renewal of leases would depend on market conditions and the condition of the containers.