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Published: October 2017      

Putting the gloss on the box

Container manufacturers have transitioned to waterborne coatings, but a winter test is still to come for the coating supply chain.

The need for all Chinabased manufacturers of dry freight containers to have converted all of their production lines to the use of more environmentally friendly waterborne paints has resulted in some supply shortages and a spike in the price of new containers this year.

It has also presented technical challenges for both suppliers and box builders, as waterborne coatings are more expensive to apply, requiring different spray guns, ovens and drying facilities. Factories have had to retool and install new equipment on their production lines to accommodate the paint, which also takes considerably longer to dry, thus slowing down output overall.

Change at last

After years of discussion, the requirement of the China Container Industry Association (CCIA), the body that represents the interests of the industry, was for the conversion work to be completed by July.

The process commenced during the summer of 2016 at plants in Guangdong province, and April 2017 in the rest of the country. It is backed by China’s leading box producers, China International Marine Containers (CIMC), Singamas, CXIC and Dong Fang International, and international paint manufacturers, including Hempel A/S, Valspar Corp, Chugoku Marine Paints, Cosco Kansai Paint & Chemicals Ltd, and Mega Coatings Company.

The objective is to cut the emission of dangerous fumes, such as volatile organic compounds (VOCs) and hazardous air pollutants, essentially the gases associated with the application of oil-based paints.

It meant many factories were closed for several weeks in the March-June period, with some analysts suggesting that as much as 70% of the country’s dry freight container manufacturing capacity was out of commission during that time. China-based groups account for more than 95% of dry freight box manufacturing capacity in the world, and so these shutdowns had a significant impact on the market.

Rising costs

For paint suppliers, too, the exercise has been time-consuming. In several cases, these companies have positioned teams of experts in the factories to advise the box manufacturers on application procedures. Costs have risen on all fronts.

The factory closures also put pressure on the supply chain, which was already stretched as several ocean carriers and lessors had advanced their orders, fearing that retooling factories would cause box shortages later in the year.

Furthermore, there were concerns, and this is still the case, that weather conditions in northern China, especially the damp and cold temperatures during the winter months, are not conducive to the application of waterborne paint, and this would cause further difficulties.

There was also a natural pickup in demand, as the global economy grew at a faster pace than expected, and this resulted in higher trading volumes.

This mix of a stronger demand for containers, factory closures, and fears over output capacity in H2 2017, resulted in the price of new containers rising. At average prices of US$1,900-2,000 per 20ft container in the first half of 2017, they were up about 40% on the corresponding period of 2016.

Cold weather

Kim Scheibel, group director, sales coordination at Hempel – a leading supplier of coatings for the container sector – believes prices could soften slightly for the rest of the year. He told WorldCargo News:

“It [the conversion to waterborne paints] is progressing, and, since 1 April, there have not been any mishaps. But the ‘fun’ will start when the temperature drops, although it is still difficult to predict what may go wrong. I trust owners will order less during these months, so as not to take any chances with their boxes. This expected drop in production, due to these limited orders, might give the factories sufficient time to handle the waterborne coatings. It might also result in a slight drop in prices offered, simply to keep the factories running at a slower speed.”

Scheibel thinks the biggest hurdle in the coming months will be the transport and then storage of the waterborne paints at the factories, prior to their application. “I have the feeling that most factories have concentrated on heating facilities around the spraying booths, rather than in the store rooms, which is also important,” he said.

Logistics is also important, and another area where costs could rise. In some cases, paint is shipped in insulated packing boxes in the winter months in areas where the temperature is expected to be below 0 degC, which adds to costs.

Passing these on will be difficult; according to the main suppliers of waterborne paints, competition has meant that they have not been able to raise prices, despite rising costs. Scheibel summed up the situation: “There used to be four to five suppliers in the container segment, but this has risen sharply, and, at the Intermodal Asia show in Shanghai in March 2017, 17 suppliers were exhibiting with the wish to sell paint to the container segment.The only way in for all these newcomers seems to be lowering prices.”

An alternative option

Hempel is looking at alternatives to waterborne coatings, but which still cut VOCs. The group is very enthusiastic about Hemparea Solutio 55770, an ultra-high-volume solids polyurea enamel coating.

Hempel has teamed up with Wiwa, a Germany-based manufacturer of pumps, and two units are currently being shipped out to China. Once in the country, the pumps will be fitted to a truck that will also be equipped with a sprayer and a tank loaded with Hemparea Solutio 55770. The truck will then visit container manufacturing plants, and trials will be conducted, with a senior Hempel technical adviser in attendance.

“We intend visiting as many factories and potential customers as possible, in order to show them the product,” explained Scheibel. “It no longer helps just to talk about it as people need to see something in action. So far, no full containers have been coated, but it will soon happen. I have high hopes for this and similar technologies in the container industry as a viable alternative to waterborne coatings. Other industries have gone this way, so why not containers as well?”

Reefers next

Scheibel also commented on the prospects and issues that will shape 2018 and beyond. “I do not see many changes taking place next year, compared to 2017, except that special containers, notably reefers, will be the next area for change,” he said. “However, in this segment, the cost of converting equipment to cater for waterborne coatings might be too high, and, from both a VOC and total energy perspective, the use of high-solids makes more sense. I see the container specials market as creating much better opportunities for high-solids coatings.”

Another issue that has been raised with WorldCargo News is that reefer containers coated with waterborne coatings are more difficult to clean. This is an issue for reefer owners, as the visual cleanliness of containers being used to transport food is very important to shippers. The future of the coatings sector will be determined by even tougher environmental regulations, which means waterborne, high-solids coatings, powders and two-component systems appear to have the brightest prospects....

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This complete item is approximately 1000 words in length, and appeared in the October 2017 issue of WorldCargo News, on page 25.

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