Container Data hints revival of demand as China reopens and rates stabilize

A recovery in demand is sighted for container transportation, as there is an increase in port congestion and container pickup charges in China.

The early indicators, as per the Container Xchange- a container logistics platform are already showing container operators expecting a demand bounce back—as the pickup charges from China to Europe Med for 40 ft High cube containers have increased by 9.7% from $513 in week 1 to $563 in week 5.

Similarly, average prices for 40 ft high cube containers increased from $3662 in week 1 in China and increased by 3.6% to $3794 in week 5. Though the increase is not significant, the fact that the downward trajectory has reversed is a good sign for many in the industry, the report from Container Xchange suggests.

China witnessed these market movements after the nation is seeing’ yet another COVID outbreak, from the ease of restrictions along with the disruptions that are usually caused during the Chinese new year.

China, compared to the last three years has shown a great availability of containers, marking another key development in the nation.

Container xChange’s Container Availability Index (CAx) readings stay elevated as compared to the last three years across the ports of Shanghai, Ningbo, Tianjin, and more. This indicates more inbound containers and few outbound containers which corroborates well with the current situation of factory closures in China and labor shortage there because of the infections.

The CAx measures the ratio of inbound to outbound containers port-wise—and a reading above 0.5 suggest more inbound than outbound containers at the ports in China.

The rise in inbound containers at this time of the year is a common sight because of the seasonal repositioning of containers back to China to balance out after peak season.

“The strategy of repositioning containers back to Asia after the peak season gains strength from the clearance strategy in the US and Europe. This effectively takes the capacity out of the market, and we see that this has been a top priority this year for carriers. The situation further helps in stabilizing the prices which have been the need of the hour for the current situation of supply chain globally.”

Christian Roeloffs, cofounder and CEO, of Container xChange

“The rebound of trade in China, and hence the container trade rebound, will depend on the pace of the reopening in China, that is, how quickly production volumes return to normal there. It is going to be interesting to see what happens when inventory stock levels in import countries have been rebalanced and there is a need to reorder. Effectively the question is whether importers are still wary of supply chain disruptions that will influence them to buy early or will they return to the ‘just-in-time’ model. In any case, we do expect to see a demand uptick—also because recent GDP figures make a recession in Europe less likely. However, because demand plummeted a lot, we will not see demand reviving to pre-covid levels or even the ‘during covid’ levels too quickly.” Roeloffs added.

China’s official manufacturing PMI came in at 50.1 for January, up from 47 in December.

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