Surge in Container Prices in China Reaches Two-Year High

This week, average container prices in China soared to their highest levels in two years, with 40 ft high cube cargo-worthy containers priced at US$3,600. This is a significant jump from the US$1,700 range seen in March-April 2024, marking a 112% increase within just two months.

While the trend in purchasing container prices is upward, one-way pick-up charges for leasing containers have also been rising rapidly in June. The chart below illustrates the evolution of average pick-up charges for 40 ft high cube cargo-worthy containers from the peak COVID-19 period until June 2024, focusing on routes from China to the US and Europe.

“Despite the significant rise in prices and rates, trading volumes have decreased as buyers become more cautious. This trend may indicate a potential reversal in prices soon, as the market adjusts to current disruptions and high volatility,” said Christian Roeloffs, cofounder and CEO of Container xChange.

Leasing Rates Triple on China to Europe Routes

Leasing rates on the China to Europe route have tripled. The average pickup charges from Shanghai to Rotterdam were around US$500 in November 2023, now standing at approximately US$1,700. Rates to Hamburg are US$2,030, and to Antwerp, they are US$1,888 as of June 23, 2024.

Leasing Rates Double on China to US Routes

Leasing rates on the China to US route have doubled since November. From Shanghai to New York, rates increased from US$568 in November 2023 to US$1,200 in June 2024. Shanghai to Oakland rates jumped from US$370 in November 2023 to US$1,663 as of June 23, 2024. Rates from Shanghai to Los Angeles rose from US$643 in November 2023 to US$1,107 as of June 23, 2024, and from Shanghai to Long Beach, rates spiked from US$610 to US$1,230 in the same period.

A Container xChange customer, a container supplier based in Shanghai, noted, “Leasing container rates have reached US$2,600 this week in China, up from US$300 just last October. These increases, driven by disruptions at sea rather than consumer demand, are unsustainable and highly volatile.”

Impact of Positive US Retail Trends on China Container Demand

The increase in US retail inventories and sales is also impacting China’s container demand. The Monthly Retail Trade Survey shows US retail inventories rising from US$769.3 billion in January to US$793.5 billion in April 2024, with significant growth in motor vehicles and building materials sectors. Retail sales continued to grow, with a 0.1% month-over-month increase in May and a 2.3% year-over-year rise. Core retail sales also saw increases, aligning with the NRF’s forecast for a 2.5% to 3.5% rise in retail sales for 2024. This growth in US retail inventories and sales indicates strong demand for container shipping services from China.

Encouraging Growth in China’s Container Throughput

China's ports recorded a 9% year-over-year increase in container throughput in the first four months of 2024, handling 104.03 million TEUs. Foreign trade cargo throughput rose by 9.1% year-over-year, and total cargo throughput reached 5.55 billion tonnes, a 5.2% increase from the same period last year.

Sanctions and Tariffs to Impact Euro-China Trade

Sanctions and tariffs may impact Euro-China trade. The European Commission has proposed tariffs up to 38% on Chinese electric vehicles, adding to the existing 10% tariff. This could signal broader trade tensions, potentially leading to increased tariffs on a wider range of goods and impacting global supply chains. Higher tariffs and trade barriers could cause delays, inefficiencies in container utilization, and higher operational costs for shipping companies.

Market Outlook

“Despite the current tariff dispute, the long-term outlook for China's container market remains cautiously optimistic. Positive trends in US retail demand and robust growth in China's port throughput suggest sustained demand for container shipping services. However, resolving the EU-China tariff dispute will be crucial in shaping short-to-medium-term market dynamics,” commented Christian Roeloffs.

“Container shipping companies should prepare for potential shifts in trade patterns by diversifying routes and enhancing logistics capabilities in other growing markets, such as Southeast Asia and South America. Investing in technology and infrastructure to improve efficiency and reduce costs will be critical in navigating potential market volatility and maintaining competitiveness,” Roeloffs added.