Maersk Container industry will focus exclusively on reefer containers.
MCI has announced another restructuring decision, this time to exit the dry freight container business altogether by closing its facility in Dongguan, China. The factory employs around 2,000 people.
According to WorldCargo News dry container production survey in October 2018, MCI-Dongguan built 110,000TEU during the opening nine months of 2018, down 20% on the same period in 2017 as its main client, Maersk, cut back on dry box ordering.
The move to shutter Dongguan follows MCI’s earlier decision to close its reefer container plant in Chile, leaving the company with one factory in China, the Qingdao reefer factory. It follows a wider strategic move by A.P. Moeller – Maersk, to refocus Maersk on integrated container transport and logistics services, and capture more of the value from the whole logistics process.
In a statement MCI said it has decided to “fully focus” on the cold chain business. “Currently, one out of three refrigerated containers used in global perishable transportation uses Star Cool container technology manufactured by MCI. With the recent launch of Sekstant Global Guidance solutions, the company is entering the IoT space, transforming reefer operations through the use of operational data,” MCI said.
“MCI’s strategy is to grow in cold chain where our Star Cool technology is a clear leader. This growth requires focused investment in the best products and services,” said Sean Fitzgerald, CEO of Maersk Container Industry. “By putting all of MCI’s resources on the cold chain business will ensure sustainable growth and continued investment in the best products and services for our customers.”
While it has a much larger share of the reefer box market, MCI is not a particularly big player in the dry box market. The Dongguan factory had an estimated capacity of 200,000 TEU per year, and dry box production in the first nine months of 2018 reached 3.3M TEU, the highest level in a decade.
Despite 2018 being a near record year for dry box production there is still an excess of capacity in the dry box industry overall, and over supply has prevented container prices keeping pace with rising costs. Another new player, FUWA, is planning to enter the market this year.
MCI sees reefer boxes as a better bet for the future. “While the market for dry containers has been challenged and has been under enormous pressure for some time, reefer volumes continue to grow due to global demand for fresh produce and other commodities,” MCI stated.
“Regrettably, our decision to focus on the cold chain business will impact our factory in Dongguan which has been idle since the beginning of December due to the tough market conditions,” added Sean Fitzgerald. “We are committed to taking care of our colleagues that are impacted by this difficult decision and we thank them for their dedication and hard work over the years.”