Where Are All the Containers? May 2023(reporting on April)

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No time to read the full report? Read our short version below:?

Asia: Container trade in China shows hints of a rebound?

Despite the global supply chains wanting to reduce dependency on China, the country’s major seaports are opening new container shipping routes this year to expand capacity, enhance foreign trade and increase market share. For example, in Q1 2023, the Shandong Province launched 13 new shipping routes in forging boutique lines bound for European and American countries.?

On our platform as well, ports in China were the most popular trading locations in April. Vietnam, Indonesia and Singapore followed suit.?

China to Russia was our most popular stretch and the average pickup (PU) charge for leasing a container in the route was $905. For example, the average PU rate from Ningbo to Moscow was $985 and the same from Shanghai was $830. After Russia, the popular destinations from China included North America and North Europe. ?

Factories in China are now running at full capacity and working on fulfilling accumulated orders. The country’s international trade is displaying resilience.? The Shanghai Containerized Freight Index?rose for three consecutive weeks in April. That had not happened since June 2022.?

This was influenced by the increase in shipping rates to the US East Coast from Asia by?around $137 per 40ft container in April when compared with the previous weeks. On the other?hand, spot rates on the US routes fell by around 80% of their peak levels last year. In the face?of the current geopolitical friction between China and the US, it remains to be seen if the?stability in China will be challenged anytime soon.?

Trade with Russia on the rise?

China is the world’s biggest energy consumer and demand for domestic fuel rebounded once?the Covid restrictions were lifted. Chinese refiners took advantage of the cheap prices of fuel?imported from Russia. Not just refiners, the country has increased other purchases from?Russia after the US and EU cut their Russian imports. No wonder then that imports from?Russia, primarily oil and gas, reportedly rose by 40.5% in a year. In fact, China’s trade deficit?with Russia has lessened by 50% to $2 billion and exports to Russia have more than doubled?to $9 billion over a year.?

Intra-Asia trade continues to show resilience??

Not just with Russia, intra-Asia trade has significantly outperformed Asia-Europe and Asia-US?trade as well. Especially after a decline in consumer confidence in the EU and North American?consumer markets, overstocked retail inventories, and the collapse of ocean freight rates last?year. According to the United Nations Conference on Trade and Development (UNTCAD), East Asia was the only region with a positive quarter-to-quarter trade growth rate in Q3 2022.??

The Indian subcontinent and Middle East:Stronger bilateral trade through reliable ocean services?

Increasing box volumes in the Indian sub-continent and the Middle East are leading to interesting?developments across the region. For example, Saudi Arabia is India’s 4th largest trading?partner. 18% of India’s crude oil imports come from Saudi Arabia. The country has also?invested in Indian roads, railways, ports, as well as in Indian manufacturing and the digital?sectors. As for the UAE, India’s exports to the country are around $28.3 billion at present and?India expects them to rise to $32 billion in 2023, which would be an all-time high. Not just the?Arab Gulf countries but India has good trade ties with Israel, Turkey, and Iran as well. Israel is?a strong defence equipment supplier for India and 43% of Israel’s arms exports are sold to?India.?

On our platform, the average price of cargo-worthy 40ft containers in the ISC and the Middle?East was $1,777 in April 2023, half of what it cost in April 2022 ($3,523).

We found that the PU charges from India to countries in the Middle East have been rising, with rising trade. While it was $5 in January, it was $37 in April.?

The online shipping solution Alphaliner noted that the biggest tonnage shift in 2022, amid tepid times for the main east-west trade lanes, was to the Middle East and India-related services, where 320,600 TEU of fleet capacity was added last year.?

Europe: The new energy shipping patterns after the Russia-Ukraine War?

Western sanctions on Russian cargo are reshaping the patterns of energy shipping. On one?hand, they are compelling fuel suppliers to seek resort to expensive and longer routes for?shipping, and on the other, these new routes are leading to more carbon emissions. The?International Maritime Organization (IMO) has set a target of a 40% reduction in carbon?emissions — compared to 2008 levels — by 2030. So naturally, the problems in the energy?sector are reflective of a deeper global concern when it comes to shipping energy products.??

Tankers with clean oil products such as diesel, jet fuel and gasoline, are now taking 16-18?days to be shipped from Russia to Brazil. Before the war broke out, that would take only 4-6?days for a vessel with these supplies to reach Europe from Russia.???

Europe is now importing more fuels from the Middle East and parts of Asia whereas Russia is?exporting the same to Turkey, Asia, North Africa, South America, and the Middle East. In fact,?earlier this year, Russia also started exporting fuel to Iran by rail. And in March, the country’s?seaborne oil product exports rose by 17.3% month-over-month.?

But while Russia’s long-haul trade with Asia heightens, the EU is also getting Russian crude?replaced with that of Asia, the Middle East and the US. Last year, the US was the largest?partner for EU exports of goods (19.8 %) and the second largest partner for EU imports of?goods (11.9 %).???

Antony Blinken, US Secretary of State, was in Brussels last month for a summit with his EU?counterpart Josep Borrell. Blinken assured to continue sending large supplies of liquefied?natural gas (LNG) to EU ports in 2023. Last year, 56 billion cubic meters (bcm) of US LNG was?imported into the EU, more than double 2021’s level.???

The EU nurtures the aspiration to become climate neutral by 2050. So, as the year passes, we expect to see Europe wanting to strengthen ties with its international trade partners.?

The US: Will US imports rebound stronger??

Globally, there has been a weakness in US import demand. While some executives and?analysts believe that the second half of 2023 will reflect a rebound in containerized?volumes, others believe that the country is bracing up for a recession. Under these?circumstances, it's difficult to determine the fate of container logistics in the US.?

On our platform, the average price of a 40ft container in the US in April was $3,091, marking a drop of around $400 since this month last year.?

In terms of container availability, CAx values for some of the primary ports in the US have stayed above 0.75, highlighting that there is a sufficient number of containers available in these ports.?

Retailers cautious of the West Coast?

The Journal of Commerce reported that five sources told them that members of the ILWU Local 13 in April were “red-tagging” cargo-handling equipment at Los Angeles–Long Beach’s three automated terminals, which designated the equipment as unsafe and forced an inspection. The Pacific Maritime Association said that this led to delayed dispatch processes. Consequently, there was a vessel back up briefly as well, a first since November 2022.??

Retailers have been cautious of the West Coast ports since last year. This is why cargo has been moving towards the East and Gulf Coasts more. It has also led to the East Coast ports faring much better than their West Coast counterparts. Overall, we expect demand to be subdued for now as retailers start depleting their excess stock. ?

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.??

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