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Home Shipping Trends

Market Volatility causing the classic ‘boom and bust cycle’ in the container shipping industry

Editor by Editor
6 months ago
Reading Time: 3 mins read
Container Carriers
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The fall in China’s exports in September, the global economic downturn and the innumerable repercussions of the endless impacts of the war, the lockdowns in China and the port strikes have been the highlight of the monthly container logistics report published this month by Container xChange, an online platform for container logistic companies to book and manage containers while also efficiently managing payment and related services.

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“What we now see is not unforeseen. The slowing down of demand, and the glut of oversupply of containers are all a consequence of the disruptions caused since the outbreak of the pandemic. It is like the classic boom and bust cycle.” said Christian Roeloffs, cofounder and CEO, Container xChange.

“There is a relatively low orders-to-inventory ratio. The retailers and the bigger buyers or shippers are more cautious about the outlook on demand and are ordering less. On the other hand, the congestion is easing with vessel waiting times reducing, ports operating at less capacity, and the container turnaround times decreasing which ultimately, frees up the capacity in the market.” Roeloffs added.

Another key trend is the early signs of companies trying to diversify their sourcing strategy with Vietnam emerging as one of the key sourcing hubs.

Based on Container xChange’s data, the price of a cargo-worthy 40 ft HC container in Ho Chi Minh City on September 22 was $3,643, the third highest on the platform. This indicates a high demand for 40 ft HC containers at the port. Not just the prices, the average pick-up rate of a cargo-worthy 20 ft from the port of Ho Chi Minh to the US dropped from $321 to $117 as well. For container users, it’s perhaps the right time to leverage these rates as the country gears up in enhancing its export growth.

All in all, on Container xChange trading platforms, the prices for cargo-worthy 40 DC boxes in the ports of China have seen a steady decline in 2022 – almost becoming half of what they were at the beginning of the year. And though the ports of India and Vietnam too have seen similar decline, the trading prices seem to have stabilized over the last two months showing an increase in demand for these boxes at the ports of Mundra, Nhava Sheva, and Ho Chi Minh City.

Europe faces historically the most difficult time in a long time

The declining consumer confidence reflects in the sliding container prices and rates in Europe.

The European market is finding itself flooded with 40 ft HC containers. As a result, the region is experiencing a fall in the prices of these boxes. As of September 21, 2022, the general average PU charge for a 40 ft HC cargo-worthy box in the ports of Europe fell from $2,996 in August to $2,773 in September. The prices for the same were $3,281 in July this year.

Logjams clear in the US

As shippers started favoring the US East Coast ports for importing cargo to the US, the PU charges from China to these ports fell dramatically. For cargo-worthy containers (20 ft, 40 ft, and 40 ft HC), the PU charges fell from $1,473 in August to $940 in September for the Port of New York. At the same time, for the Port of Savannah, the drop was from $1,211 to $874.

The PU charges from China to the ports on US West Coast were running high in the beginning of the year, nearing $3000. As the logjams in these ports began clearing up, the PU charges too started falling slowly. For cargo-worthy containers (20 ft, 40 ft, and 40 ft HC) from China to Los Angeles, the PU charges fell from $1,664 in August to $1361 in September. The drop was from $1,514 to $1,156 for the port of Oakland

Source: Container xChange 

Tags: container ratesContainer xchangeport congestionsupply chain
Editor

Editor

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