Empty shipping boxes are piled high at container manufacturers and depots in China, the latest indicator that the unprecedented global shipping boom that began in early 2003 is running out of steam.

Shares in China International Marine Containers and smaller rival Singamas Container Holdings - which between them make about three-quarters of the world's shipping containers - are down by more than 40 percent from their record highs in April.

At Shanghai Baoshan Pacific Container, owned by Singamas, more than 30,000 boxes are stacked where a year ago there were none, said Ren Yudong, deputy general manager.

Container lines, hit by a shortage of boxes last year, ordered more than they needed, analysts said. This year shipping firms also moved as many empty boxes as possible back to China to prepare for congestion at US and European ports that has been less severe than expected.

Across China, more than 700,000 20-foot equivalent units (TEUs) have been sold but are waiting for buyers to take delivery. ``We can see a large number of empty boxes that were shipped back from the United States and Europe piling up everywhere in China,'' Ren said.

CLSA forecasts that the average selling price per 20-foot dry freight box will fall by about 12 percent to US$2,075 (HK$16,185) by the fourth quarter of 2005 from US$2,350 in the first quarter.

Analyst Nancy Wang at KGI Asia in Shanghai expects average global container demand to decline to 2.5 million-2.8 million TEUs annually for the next two to three years from three million in 2004. ``The peak is definitely over,'' she said.

Shipping lines, which enjoyed a boom thanks to robust trade fueled by China's roaring economy, are seeing freight rates hit by slower China demand and an expected glut of container ships. The Baltic Exchange Dry Index, which represents the rate for chartering dry bulk vessels, has lost 62 percent from a December peak to a near two-year low.

Container freight rate increases are slowing or stagnating, despite a demand-supply balance this year, and some analysts doubt the 2005 peak season surcharge will match last year.

``If not, there is a risk of a year-on-year decline in rates on trans-Pacific routes during the peak summer season,'' said ABN Amro in a research report.

Share prices of shipping firms are under pressure.

South Korea's STX Pan Ocean Friday priced its Singapore IPO nearly 30 percent lower than planned. Last month, shares in China COSCO Holdings fell 10 percent on their debut after a US$1.22 billion IPO.

But some analysts and officials in the container industry said its current woes should be short-lived.

Singamas vice president of finance, Sylvia Tam, said the firm had about two months of stock against its usual one month, but expected to clear excess inventory in the third quarter.

``Some buyers put their orders on hold on expectations that steel prices could fall further,'' Tam said.

Falling steel prices mean not only delayed orders but also narrowed margins for boxmakers, analysts say.

Macquarie Research expects that new container ships coming into service in the next few years will revive container demand.

Orders for new container ships remain at record highs - 56 percent of the existing fleet over the next three years - and the small number of firms who dominate the box industry implies low price competition, Macquarie wrote in a recent report.

``The current bout of weakness in the share prices is based on poor short-term sentiment and ignores the positive long-term outlook,'' Macquarie said. REUTERS