Owing to the rising complications resulting from the geopolitical tensions and uncertainties, container prices in China are experiencing significant volatility, with rates changing rapidly within just a few days.
According to Container xChange, an online container logistics company, based in Hamburg, the average container prices in China have already reached around 2500-2700 USD (40 ft high cube, cargo worthy containers).
China’s container market has always been dynamic, but recent developments have triggered significant price hikes. Container prices are continuously climbing, adjusting roughly every 48 hours, industry experts have said.
This increase largely stems from uncertainty related to the Red Sea situation, as well as suppliers and sellers looking to hedge their risks. Prices for a 40 ft (cargo worthy) container have jumped from USD 2,200-2,300 in April to USD 2,500-2,700 currently.
Another expert stated that in April, shipping lines and leasing companies placed new orders of more than 10,00,000 TEU, factories are fully occupied till the end of July, and some factories are even occupied until September. Some container sellers are holding up the inventory, in anticipation of price hikes in May.
An analysis from Container xChange’s trading and leasing platform showed that the container trading and leasing prices continue to rise Ex-China to Europe and to the US in April.
It also points that the volatility in container prices is much more evident since the beginning of this year (2024) until April as compared to the last year (2023).
“Despite the recent price hikes, we’re observing a market that is not yet fully tight. Containers are still available, depots are not operating at full capacity, and while prices are increasing, it’s not at the rapid rate we saw during the post-Covid demand pent-up period. The situation is improving for stakeholders, but not significantly,” Christian Roeloffs, Cofounder and CEO of Container xChange, said.
He further said that the demand prospects remain subdued, and the price hikes are primarily driven by uncertainty rather than purely by demand. “This market condition requires stakeholders to remain vigilant and informed of current market currents, invest in cost optimisation strategies and develop algorithms for demand and supply forecasting,” Roeloffs added.
Container xChange surveyed depot owners to assess their capacity utilisation since the Houthi attacks in the Red Sea. The majority reported operating below full capacity, particularly in China, indicating that depots there are not facing significant pressure from container inventory. In contrast, depots in the US and Europe reported higher utilisation rates.
Despite depots not facing significant pressure from container inventory, there remains a question of where the pressure lies in soaking up the excess containers in the market.
According to Container Xchange, there are two possibilities. First, the diversions of vessels around the Cape of Good Hope impact both vessel capacity and the container fleet. If diversions soak up 10 per cent of vessel capacity, and vessels can carry over 24,000 TEUs on average, a significant number of containers are absorbed en route.
Second, a substantial number of containers are stranded in network locations with a structural surplus of container inventory. Shipping these containers out may not be economically feasible due to factors such as high transportation costs, inexpensive storage at the location, or the containers nearing the end of their operational life.
Another key finding from the survey reveals that depot owners reported increased costs in two major heads since the beginning of the Houthi attacks – equipment usage fees and storage space rentals. Other overheads that have witnessed cost increases over the past five months include administrative fees, container handling charges, daily and monthly storage fees, demurrage fees, and security and surcharge fees.
It further said that ports such as Ningbo, Qingdao, Shanghai, and Busan experienced price increases over the 11-month period (June 2023 to April 2024). Ports like Antwerp and Rotterdam saw relatively stable prices, with minor fluctuations observed.
While Singapore experienced moderate fluctuations, average container prices overall showed a slight decrease. The increase in prices in Northeast Asia suggests a robust market for transshipment services, driven by factors such as regional trade dynamics and economic growth.
