Logistics News

Container rates likely to drop below pre-covid levels

A slowing of demand for shipping containers is driving a reduction in prices for the boxes around the world

Container trading and leasing platform Container xChange is predicting a continued decline in the cost of shipping containers throughout October.

A reduction in exports from China in September, impacts of war, port strikes and the global economic downturn have been listed as socio-economic drivers that are decreasing demand for containers among shipping companies.

“What we now see is not unforeseen,” says Container xChange CEO Christian Roeleffs.

“The slowing down of demand, and the glut of oversupply of containers are all a consequence of the disruptions caused since the outbreak of the pandemic. It is like the classic boom and bust cycle.”

Roeleffs says there are relatively low order numbers in the market when compared to the inventory of containers available with retailers and bigger shippers being cautious on the outlook for the months ahead and ordering less.

“On the other hand, the congestion is easing with vessel waiting times reducing, ports operating at less capacity, and the container turnaround times decreasing which ultimately, frees up the capacity in the market.” Roeloffs added. 

The xChange data reveals another key trend with early signs of companies trying to diversify their container sourcing strategy with Vietnam emerging as one of the key sourcing hubs. 

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Based on Container xChange’s data, the price of a cargo-worthy 40 ft HC container in Ho Chi Minh City on September 22 was $3,643 USD, the third highest on its platform.

It reports the prices for cargo-worthy 40 DC boxes in the ports of China have seen a steady decline in 2022 – almost becoming half of what they were at the beginning of the year. And though the ports of India and Vietnam too have seen similar decline, the trading prices have stabilised over the last two months showing an increase in demand for these boxes at the ports of Mundra, Nhava Sheva, and Ho Chi Minh City. 

In Europe, data shows the average charge for a 40ft HC cargo-worthy box fell from $2996 in August to $2,773 USD in September. The prices for the same boxes were $3,281 in July this year.

Pick up (PU) charges for importing cargo from China to the east coast ports of the US are dropping too – from $1,473 USD in August to $940 USD in September for the Port of New York.

On the west coast, PU charges from China were close to $3000 at the start of the year. Most recently, China to Los Angeles PU charges for September hit $1361 USD per container.

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