Container Prices Witness Sharp Jump on China-US and China-Euro Routes

In what seems to be an unending story of a volatile operating environment, the average container prices in China have reached their highest in two years. Standing around USD 1,700 during March-April 2024, the prices have more than doubled to reach USD 3,600 this week for 40 ft high cube cargo-worthy containers in China. This marks a whopping 112% increase in a span of just 2 months.

On the other hand, the average one-way pick-up charges (for leasing containers) continue to
develop at a staggering rate so far in June. The development of average pick-up charges for 40 ft-high
cube cargo-worthy containers from the peak pandemic period till date (China to the US and Europe) has been represented below.

Christian Roeloffs (Co-Founder and CEO of Container xChange) revealed that trading volumes have seen a decline as consumers become cautious. He said that this may lead to a potential reversal of
prices in the near future, as the market adjusts to the current disruptions and the high
levels of volatility.

In November last year, the average pickup charges from Shanghai to Rotterdam were somewhere around USD 500, however, they have seen a 3X jump and landed around USD 1,700. Similarly from Shanghai to Hamburg a pickup now costs USD 2,030 and costs USD 1,888 to Antwerp, in June 2024.

Overall, the pickup charges doubled since November until June Ex Shanghai to key ports in
the US.

  • Shanghai to New York rates were around USD 568 in November 2023, which are now at USD 1,200 so far in June 2024.
  • Shanghai to Oakland rates were USD 370 in November 2023 which are now at USD 1,663 as on 23 June 2024.
  • Shanghai to Los Angeles rates were USD 643 in November 2023, reaching USD 1107 as on 23 June 2024.
  • Shanghai to Long Beach pickup charges also spiked from USD 610 to USD 1,230 in the same duration.

“We witness asking rates for leasing containers reaching USD 2,600 this week in China. This is crazy. Without any significant demand surge from the consumer side, these prices are increasing
only because of the disruptions at sea and not driven by demand, which worries us
because this means it’s not sustainable, highly volatile,” shared a container supplier based in Shanghai.

While he mentioned that buyers and lessees are waiting it out, an immediate correction is not expected. “The market is too active, and freight demand continues to remain strong here in China,” he added.

US Retail Inventories and Sales Growth: The Monthly Retail Trade Survey shows a consistent rise in US retail inventories, from USD 769.3 billion in January to USD 793.5 billion in April 2024. Significant increases are seen in sectors like motor vehicle and parts dealers and building materials.

Continued Retail Sales Growth: In May, retail sales increased by 0.1% month over month and 2.3% year over year, with core retail sales (excluding automobile dealers, gasoline stations, and restaurants) rising by 0.3% month over month and 2.9% year over year. This aligns with NRF’s forecast for a 2.5% to 3.5% increase in retail sales for 2024.

The rise in US retail inventories, particularly in sectors like motor vehicles and building materials, indicates strong demand for container shipping services. This is expected to increase the need for container shipments from China, a major manufacturing hub.

On the other hand, the European Commission has proposed tariffs of up to 38% on Chinese electric vehicles, in addition to the existing 10% tariff, citing concerns over state subsidies. While the Container shipping sector is not directly impacted by these EV tariffs, trade barriers could lead to delays and additional costs in the supply chain, causing inefficiencies in container utilization and higher operational costs for shipping companies.

Roleoffs suggested that container shipping companies should prepare for potential shifts in trade patterns by diversifying their routes and enhancing logistics capabilities in other growing markets. Investing in technology and infrastructure to improve efficiency and reduce costs will be critical in navigating the potential market volatility and maintaining competitiveness.

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