Where Are All the Containers? March 2024

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Asia

Overview of container leasing rates

Container leasing rates from China to the US were higher than the rates from China to Europe in February 2024. The average leasing rates from Shanghai to ports in the US were $1,540, whereas the rates from Shanghai to ports in Europe averaged $1,045.

Chinese exporters seek rail freight as viable alternative

In response to disruptions caused by attacks on the Red Sea, shippers have urgently sought alternative transportation routes for cargo from China to Europe. Freight forwarders have reported a sharp uptick in inquiries and bookings for the rail route. Data indicates that rail operators moved approximately 28 million tonnes of goods between China and Europe via rail freight.

Shippers increasingly find rail transport appealing due to its cost-effectiveness compared to air freight and faster transit times compared to ocean transportation. Ocean shipping from China to the Dutch port of Rotterdam through the Red Sea typically takes around 27 days. However, rerouting via the Cape of Good Hope adds 10-12 days to the transit time.

In 2024, a total of 478 container ships with a combined capacity of 3.1 million TEU are scheduled for delivery, surpassing the previous record set in 2023 by 41%. This surge is expected to result in a 10% growth in the container fleet capacity for the year.

The ISC and Middle East

Overview of freight rates trends

Freight rates from China/East Asia to North Europe and the Mediterranean saw a slight decrease from $5,654 to $5,194. However, freight rates from China/East Asia to the US East and West Coasts continue to rise, albeit at a slow rate.

Red Sea Attacks’ grip on ocean freight rates loosens

The Red Sea crisis led to a significant surge in ocean freight rates over the last two months. However, there are indications that the upward pressure on shipping rates for crucial trade routes may be easing. Ocean freight rates for shipping from Europe and the Mediterranean began declining towards the end of January.

As of February’s General Rate Increases (GRIs), the cost for a forty-foot container from the Far East to the Mediterranean is projected to be $5,950, down from the recent peak of $6,050 on January 16. Similarly, on the trade route from the Far East to North Europe, rates for 40-foot containers are expected to start at $4,820, slightly below the January 16 peak of $4,850.

Despite challenges in the Red Sea, India experienced modest growth in exports in January 2024, recording a 3.12% year-on-year increase to $36.92 billion. The positive trend was supported by sectors such as electronics, engineering goods, and pharmaceuticals.

Europe

Overview of container price trends

The average price of a 20ft cargo-worthy container in ports of North Europe was $1,120 in September 2023. The prices have decreased to $972 in February 2024, marking a 19.37% decrease.

UK economy plunges into recession with GDP contraction

Britain’s economy entered a recession in the second half of 2023, as official data reveal a 0.3% contraction in GDP during the three months ending in December. This followed a 0.1% shrinkage from July to September. The British economy has only seen a marginal 1% growth since late 2019, prior to the Covid-19 pandemic.

Container hub ports in Northern Europe are effectively managing the arrival of a cluster of ships from Asia, which experienced delays due to rerouting around the South African coast. Contrary to initial concerns regarding a potential recurrence of port congestion similar to the aftermath of Ever Given’s blockage of the Suez Canal in 2021, recent reports indicate that such fears are unfounded.

The US

US shifts trade tide: Mexico overtakes China as top exporter

In February 2024, recent data by the US Bureau of Economic Analysis (BEA) unveiled a significant shift: Mexico has surpassed China as the primary source of official imports for the United States, marking the first time in two decades.

Between 2022 and 2023, the value of goods imported to the US from Mexico increased by almost 5%, reaching over $475 billion, according to the Commerce Department. In contrast, Chinese imports fell 20% at the same time, totaling $427.2 billion, just marginally above Canada’s imports.

Despite contracting industrial activity and declining consumer confidence, China has sent the highest ocean container freight volume to the US since May 2022. This is mainly due to the Chinese New Year, robust retail sales, and disparities in data.

In February 2024, 522,782 TEUs were imported to the US, while 331,085 TEUs were exported, indicating a container surplus.

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