Global container production hits a record high, yet India’s growth lags due to higher production costs and infrastructure needs.
In a year marked by unparalleled demand for shipping containers, the global container industry is witnessing a historic surge, set to surpass previous production records. With output projected to exceed 7.3 million TEUs (twenty-foot equivalent units) in 2024, this year’s production could outstrip the 6.68 million TEUs manufactured during 2021’s peak. While countries like China continue to lead container manufacturing to address worldwide shortages, India’s own production aspirations, tied to the “Make in India” initiative, face substantial obstacles, primarily due to higher manufacturing costs.
Global Container Demand Soars
Disruptions in the global supply chain have driven unprecedented demand for containers, forcing ocean carriers and leasing companies to order significantly more units to keep trade moving. Supply chain disruptions, including the Panama Canal drought, the Red Sea crisis, and a surge in U.S. importers front-loading peak season cargo due to East Coast and Gulf Coast port strikes, have highlighted the need for additional containers. This increased demand has led to delayed container turnaround times and a 15-20% decline in productivity, placing pressure on the global market to produce more containers and stabilise operations.
This global container boom has primarily benefitted China, where manufacturers account for over 97% of production. In 2024, Chinese container manufacturers, including China International Marine Containers (CIMC), Dong Fang International Containers (DFIC), and Singamas, have reported increased revenues and profitability. With Chinese factories fully booked into the later part of the year, production estimates for the year indicate a new high. Many manufacturers have added shifts and increased staff to meet rising demands while also introducing cost-saving measures to enhance productivity.
India’s Ambitions Constrained by Costs
India, through its “Make in India” scheme, aims to develop its container manufacturing industry, with an established cluster in Bhavnagar, Gujarat. India’s Global Trade Research Initiative (GTRI) reports that the country produces between 10,000 and 30,000 containers annually, catering mostly to the domestic market. However, India faces a steep cost disadvantage—production costs for a 40-foot container are approximately $1,000 higher than in China, making Indian containers around 25% more expensive.
To help bridge this cost gap, GTRI has recommended implementing financial incentives, subsidies, and investment in infrastructure to make India’s container manufacturing sector more competitive. However, despite strong demand, the higher production costs continue to constrain India’s expansion efforts.
Major Players Expand to Meet Demand
As demand surges, China’s leading manufacturers have aggressively scaled production. CIMC, for example, has expanded its container output in response to demand, producing over 1.38 million TEUs of dry freight containers in the first half of 2024 alone—a 425% increase compared to the same period in 2023. DFIC and Singamas have also reported substantial increases, aided by investments in digital solutions, energy-saving systems, and diversified product lines such as energy storage containers and modular construction containers.
Additionally, to navigate market volatility, DFIC has ventured into energy storage solutions and special-use containers, while Singamas has expanded its leasing division to stabilise revenue.
Competing Challenges and Strategic Partnerships
The container shortage has led shipping lines to reroute vessels through alternative paths like the Cape of Good Hope, bypassing the Suez Canal due to risks associated with the Israel-Gaza conflict and Red Sea incidents. These disruptions have amplified the need for containers as carriers adjust service routes and schedule changes, resulting in increased orders for new units.
In Vietnam, Hòa Phát Group has emerged as a new player, ramping up container production with backing from international partners. Orders from companies like SeaCube Container Leasing and Hapag-Lloyd highlight the importance of Vietnam’s strategic location for meeting container demand across the Asia-Pacific region. However, India, despite its aspirations, remains challenged by cost barriers that hinder its potential to become a competitive player on the global stage.
Looking Ahead: India’s Path Forward
With record-breaking production anticipated in 2024, the global container manufacturing industry has shown resilience and adaptability in response to supply chain challenges. For India, scaling up its container manufacturing capabilities requires addressing cost disadvantages through targeted financial incentives and investments in infrastructure. By closing the cost gap with global leaders, India could play a pivotal role in the supply chain network while fostering growth within its logistics sector. Until then, China’s manufacturing giants continue to drive the global container boom, capturing significant gains as they support international trade during a time of heightened demand.
