Where Are All The Containers? June 2023

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No time to read the full report? Read our short version below for our analysis on May 2023 trends and prices:

China?

Overview of container prices in May??

On our platform, the average prices of cargo-worthy 40ft containers in Asia have recorded a sharp drop. We saw that the prices of these boxes in China, Vietnam and Singapore have dropped by more than 40% when compared to last year. The average price in China for this box dropped from $3,413 in May 2022 to $1,516 in May 2023; $3,546 to $1,487 in Singapore; $3,213 to $1,441 in Vietnam.?

Exporters in China are worried that an uncertain and weakening global economy is impacting their businesses and compelling them pause their investments. To make matters worse, there has also been a dramatic decrease in demand for products from China in the US and EU.?

Reuters quoted Kris Lin, a representative from Christmas light producer Taizhou Hangjie Lamps, saying that 2023’s orders were 30% lower than last year. "The difficulties last year came from logistics and production disruptions but the local government helped solve the problems. That's an internal issue. Now we have external problems. We can't solve those,"?

Possible outcomes of the drop in demand include:?

Labour layoffs?

It is unlikely that Chinese suppliers will lower the prices of the products or invest more in operations and production. Consequently, this means that they will look at reducing the cost of labour. Small and medium businesses in China’s manufacturing sector have already noted both factory closures and layoffs to tackle the economic situation.??

Shifting to the Global South and the BRICS country?

The BRICS alliance of Brazil, Russia, India, China, and South Africa accounts for 17% of global trade and one-third of global GDP. Therefore, it plays a critical role in ensuring global financial stability. In the last few months, the Global South has been increasingly interested in BRICS as a way of moving away from the ‘Western financial system’, according to data released by the Islamic Republic’s Customs Administration.?

Stronger focus on the Belt and Road Initiative?

Last year, Qingdao Port in eastern China opened 38 new routes. These routes were mostly along the Belt and Road Initiative route and catered to emerging markets such as Southeast Asia, Latin America and the Middle East as opposed to the US or North Europe. The port now handled almost 7 million 20-foot TEUs in Q1, recording 16.6% since Q1 2022. According to the General Administration of Customs of China, the country’s exports of intermediate goods to nations of the Belt and Road initiative rose 18.2% in the first quarter from the year earlier to $158 billion, representing more than half of all exports to these countries.?

The Indian subcontinent and the Middle East?

Overview of container prices in May??

According to our data, the main ports in India have sufficient availability of containers. In May, the CAx scores of the ports of Chennai, Mundra and Nhava Sheva were well above the 0.5 mark, thereby recording that more containers are entering these ports than the number of containers that are leaving them.?

The average prices of containers (all types and conditions) have also been plummeting. In May, the average price of a box was 51.15% lower ($2,299) than at the same time last year ($4,494). High availability of boxes and low prices along with government initiatives are now making the country commercially more attractive.?

And in the Middle East, the average price of a cargo-worthy 40ft container has dropped by $1,000 in a year on our platform. But while the prices have dropped, we have seen a significant rise in our container transactions month-on-month.?

In terms of availability, some of the top ports in the region, such as Jebel Ali, Jeddah, Karachi and King Abdullah City showed CAx values higher than 0.5. This indicates the availability of containers at these ports.?

The Middle East region has been recording increasing container volume and efficiency. In yet another update, the Saudi Ports Authority (Mawani) announced that its container throughput grew at an annual rate of 13.34% in April. But not just Saudi Arabia, Qatar too has demonstrated growth of building materials, livestock and cargo movement in April. According to Mwani Qatar’s data from Q1 2023, there has also been a 15% increase in the handling of cars and equipment. In April, there were 228 ships calling on Qatar’s three ports. And Oman’s port of Salalah is not far behind either. The port is one of the largest multi-purpose ports in the Middle East. In January this year, the port handled 1.9 million tonnes of general cargo, the highest volume in the terminal.??

Europe?

Overview of container prices in May??

The average prices in Europe for cargo-worthy 40ft containers have continued to fall in the last two years. When we compared the prices in Europe North during and after the pandemic, they had fallen by 68% in May 2023.?

But despite the signs of rebound, the container logistics industry is struggling with issues such as depots being overwhelmed; rising demurrage and detention costs; drop in consumer confidence; and a global banking crisis.??

In June last year, fresh on the heels of the Russia-Ukraine war, inflation in the eurozone had risen to a record of 8.6%, adding to a cost of living crisis. In April 2023, the euro area annual inflation rate had come down to 7.0%. Even though the inflation rate is modestly easing, other factors such as union strikes in France over a pension reform bill in March; walkouts at the port of Hamburg, also in March; the Easter holidays in April and the subsequent inflationary pressure, have all caused service closures and limited labour availability in the European market.??

The rates to ship containers from Europe have dropped from their 2021 and 2022 peaks. Spot rates on some routes have fallen by 70%. A Container xChange customer said, “There are more containers coming back to the depots as compared to the number of containers going out of depots. We see lower freight rates and heavy price competition, especially for small freight forwarding companies. The bigger freight forwarders are providing rates below market prices to push competition out towards consolidation.” He also added, “On the Europe to China route, freight rates are as low as $91 dollars. Carriers only give 7 days of ‘free days’ for container storage and then need to pay high demurrage and detention charges for another 7 days if they need to use containers for longer.”?

The US?

Overview of container prices in May??

On our platform, the average price of a cargo-worthy 40ft container in the US in May was $2,048, marking a drop of 40.6% since May 2022 when the same price was $3,092.?

The most pressing concern in the US ports right now is the ongoing negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA). The West Coast dockworkers have been operating without a new contract since July 2022. Automated processes, wages, pensions are among some of the top concerns in the negotiations. This has led to a lot of uncertainties, forcing cautious shippers to move cargo to the other ports in the US. But at the same time, also posing a threat to the US economy as the West Coast ports account for 50% of the country’s import volumes. They also reportedly account for about 12% of the US GDP.?

US President Joe Biden sent his Acting US Secretary, Julie Su, to San Francisco on June 12 to talk to both parties. Following that, the PMA and ILWU agreed to a truce as dockworkers agreed to return to normal working hours momentarily.?Finally on June 14, the Pacific Maritime Association and the International Longshore and Warehouse Union announced a tentative agreement on a new six-year contract covering workers at all 29 West Coast ports. The parties will not be releasing details of the agreement at this time.? The agreement is subject to ratification by both parties.?

And that’s a wrap! If you want more details about the global supply chains along with some smart container shipping routes, prices, pickup rates and the hot trading and leasing stretches on Container xChange, download our monthly research report here. Get your copy of the full report here: https://bit.ly/3JfiJEk