How to set up docker compose with django and pdm

I have a django project with pdm and docker compose and I set up the codebase volume to enable django hot reload and debugging in the container. Building with the compose config works fine but when I try to run the server with docker compose up -d I hit a python error as if the libs were not picked up properly.

The project has the following architecture

project/
├── config/
│   ├── settings.py
│   └── urls.py
│   └── ...
├── some_django_app/
│   └── ...
├── compose.yaml
├── Dockerfile
├── README.md
├── pyproject.toml
└── pdm.lock

the compose file is as follows

services:
  web:
    build:
      dockerfile: Dockerfile

    command: pdm run python manage.py runserver 0.0.0.0:8000
    ports:
      - 8000:8000
    volumes:
      - .:/app
    env_file:
      - .env

my dockerfile is as follows

# Use an official Python runtime as a parent image
FROM python:3.13.2-slim-bullseye

# Set environment variables
ENV PYTHONDONTWRITEBYTECODE=1
ENV PYTHONUNBUFFERED=1

# Set the working directory in the container
WORKDIR /app

# Install system dependencies
RUN apt-get update && apt-get install -y \
    build-essential \
    libpq-dev \
    && rm -rf /var/lib/apt/lists/*

# Install PDM
RUN pip install --no-cache-dir pdm

# Copy the project files into the container
COPY . /app

# Accept build argument for ENVIRONMENT
ARG ENVIRONMENT=prod

# Install project dependencies using PDM
pdm install --prod --no-lock --no-editable;

Here is the trace of the error when I up the container

INFO: The saved Python interpreter does not exist or broken. Trying to find another one.
INFO: __pypackages__ is detected, using the PEP 582 mode
Traceback (most recent call last):
  File "/app/manage.py", line 12, in main
    from django.core.management import execute_from_command_line
ModuleNotFoundError: No module named 'django'

The above exception was the direct cause of the following exception:

Traceback (most recent call last):
  File "/app/manage.py", line 23, in <module>
    main()
    ~~~~^^
  File "/app/manage.py", line 14, in main
    raise ImportError(
    ...<3 lines>...
    ) from exc
ImportError: Couldn't import Django. Are you sure it's installed and available on your PYTHONPATH environment variable? Did you forget to activate a virtual environment?

It is as if pdm couldn't pick up my local libs. When I remove the container line in my compose file and rebuild, django runs fine. What is wrong with my configuration?

ENTRYPOINT ["pdm", "run"]
CMD ["./manage.py", "runserver", "0.0.0.0:8000"]

version: "3.8"
services:
  web:
    build: .
    ports:
      - 8000:8000
    env_file:
      - .env

# Dockerfile
# Don't install pdm, but you should be able to
WORKDIR /app
COPY pyproject.toml ./  # maybe with some other files too, but not the whole project
RUN pip install -e .    # into the "system" Python
COPY ./ ./
# There's not a virtual environment so you don't need to do anything to activate it
CMD ["./manage.py", "runserver", "0.0.0.0:8000"]