Trucking

How long does it take to manufacture a shipping container?

How long does it take to create a container? The simple answer is: Time is not important, it is only a matter of hours, including the automated process of assembling the steel walls and drying the paint.

Containers are manufactured in highly efficient and automated factories, virtually all in China. Eight out of ten containers manufactured worldwide are manufactured by three Chinese companies: CIMC, Dong Fang and CXIC...

One indicator of how fast a new box can pop out: a factory in China can theoretically operate 24 hours a day and add a second 12-hour shift, but also this year’s historic demand Regardless, it doesn’t. One of the reasons they kept one shift (besides supporting container prices) is related to customer preferences.

In an interview with American Shipper in May, John Fossey, Head of Container Equipment and Leasing Research at Drewry, explained: Manufacture the entire box at night and paint the container at night — some customers don’t want it. The quality is not as good as the ones produced during the day shift. “

What that means is that the box can be manufactured, painted and dried within one shift.

Another indicator of how quickly a container can be built is high production. According to Drewry, the factory mass-produced 3,368,000 20 feet worth of equipment earlier this year.

According to Fossey, as of May, the factory was operating 10-11 hours a day, 6 days a week, with most of the units produced being 40 footers compared to 20 footers. Assuming that the back-of-the-envelope calculation gives the factory 70% 40 footers and 30% 20 footers, this is the first half pace of over 20 containers that the factory produces online every minute. ..

Bigger question

But in reality, the bigger question is not how long it takes a Chinese factory to make one box. The bigger question is how long does it take to start the service after ordering the box?

It is usually reported that it took only 6 weeks. Needless to say, these are not normal times. This year’s lead time is said to be as long as four months.

The final piece timeline for “How Much Does It Take?” Includes delivering the newly built box from the factory to the liner for deployment.

For 20-foot and 40-foot marine containers, lag is minimized. One of the main reasons why box factories are overwhelmingly concentrated in China (in addition to the support of the Chinese government, which lowered production costs) is that new production is done without the need for costly relocation by liners. This means that we can immediately deploy the equipment to the Chinese export market.

As of late July, new boxes were in stock for only a couple of weeks. This means that the newly constructed equipment was rapidly absorbed into the market within a month.

Wal-Mart domestic container loaded on the deck of a general cargo ship earlier this year (Video: YouTube)

This is a different story for 53-foot containers in the United States. Despite the fact that these boxes are only used in the United States, they are not manufactured there. Despite the cost of relocation, American builders cannot compete with China, so they are all manufactured in China.

After construction, 53 footers will have to compete with the loaded 20 and 40 footers for slots in transportation services to the east across the Pacific — Services that are currently experiencing significant delays.. Some retailers are taking extreme steps: Wal-Mart (NYSE: WMTFor example, this year we brought 53 footers overseas to the deck of ships other than container ships.

In summary, it seems that the time from ordering to delivery is about one-fourth to one-half, depending on the type of container.

“Pig cycle”

It’s still short enough that container equipment doesn’t overwhelm the so-called “hog cycle” effect that plagues commercial transportation. In economic theory, the pig cycle is the lag time between productions (the pig breeding period) and the time when higher pricing facilitates the decision to increase production.

The pig cycle effect has historically had a significant impact on the volatility of marine cargo. For example, container ships ordered today will not be delivered until 2024. By that time, demand may plummet and the market may not need new vessels. On the other hand, prices were low a couple of years ago, so there were few orders, and today’s prices are very high.

In contrast, the time lag between ordering and delivering container equipment is short enough that production does not overshoot or undershoot and volatility is reduced.

Brian Sondey, CEO of container lender Triton International (NYSE: NYSE :) TRTN), Explained at his company’s July 27 conference call: “The latest container order we placed was delivered by the end of September. Shipping companies are usually slowing down the pace of bringing containers into the fleet in the fourth quarter. Of course, this year is a rare year. Indeed, in the fourth quarter, customers may continue to pull equipment into the fleet to help with ongoing disruptions.

“But the good thing about our business is that at least we still don’t have to guess about it. Probably one more thing before we start guessing for ourselves whether to order a lot of equipment in the fourth quarter. It has a merit of a month. We will continue to buy as long as the market exists. “

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