6 months ago • 2 mins
What’s going on here?
Recent data suggests that global container production, once experiencing roomy growth, has now found itself in a tight spot.
What does this mean?
Just yesterday, it seems, shipping giants were scrambling for containers, thanks to a pandemic-induced crunch and simultaneously roaring demand. But now the pendulum has swung back: demand for goods has plunged off the proverbial cliff, leaving port owners playing real-life Tetris in a bid to store their record glut of unused boxes. Naturally, that’s seen container production take a nosedive: data from a maritime consultancy showed the number of 20-foot containers (the industry standard) fell a chunky 71% last quarter from the year before, dropping to around 300,000. And the outlook isn’t sunny going ahead, either: Maersk, one of the world’s biggest shipping behemoths, has paused dry container production till at least 2024.
Why should I care?
The bigger picture: Headwinds and countercurrents.
This container crunch mirrors the current state of trade and – by extension – the whole global economy right now. After all, the World Trade Organization expects this slump to be around for at least the rest of the year, and recent economic indicators seem to agree. Data out Tuesday showed a measure of eurozone business activity missed expectations and fell to a three-month low in May, weighed down by the flagging manufacturing sector. And while the IMF now thinks that calm-and-carrying-on Brits might dodge a recession, that doesn't mean they're in for an economic boom anytime soon.
Zooming out: Digital docking station.
As shipping fortunes ebb, port businesses are anchoring their hopes in automation. And China – a formidable player in global shipping – is leading the charge, already automating an increasing number of dock operations. The US isn’t just watching from the shoreline, though: it’s nudging the American industry to follow suit. With any luck, then, this digital transformation could offset costs and help better weather any future pandemic-style blasts.
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