Posted on October 25, 2021
Shipping container prices have declined for the first time this year after skyrocketing to historic highs as China’s Christmas exporting season slows, creating a temporary respite for exporters.
The average sale price of a 40-foot container in China has plunged by 22.5 per cent since the end of September, to US$6,598 this week, according to Container xChange, an online platform for the leasing and trading of shipping containers.
For container leasing, Container xChange’s data shows that the average one-way leasing pickup charges for the China-US stretch plunged by 35 per cent during the seven-day “golden week” holiday in China at the start of October to US$1,800.
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Retailers are looking to pile up stock ahead of the Christmas holidays and the falling prices could well become the new normal from hereon. This could probably be a very early sign of stabilisation of the market
“The easing prices show temporary consolation in the global container shortage crisis,” said Johannes Schlingemeier, co-founder of Container xChange. “There are possibilities that the trend will continue because we are halfway through the busiest time for the shipping industry.”
According to Container xChange, 46 ports globally experienced a moderate pullback in average container prices. The hotspots include China, Vietnam and the United States.
“Retailers are looking to pile up stock ahead of the Christmas holidays and the falling prices could well become the new normal from hereon. This could probably be a very early sign of stabilisation of the market,” Schlingemeier added.
The drop in prices could also be temporary due to the closure of factories during the golden week holiday in China, said Christian Roeloffs, also a co-founder of Container xChange.
The price correction in container markets coincided with a fall in the shipping freight costs between China and the US. Shipping freight costs or rates, as opposed to the cost of a container, refers to per unit prices to ship goods.
According to global freight booking platform Freightos, Asia to US ocean rates were 16 per cent below their September peak this week.
“If this is the start of a minor lull, it is likely to be short-lived. Just as retailers pulled peak season orders earlier than usual to account for delays, so too the other ocean freight peak around Lunar New Year [at the start of February] is likely to start early,” said Judah Levine, head of research at Freightos.
Despite the cooling, shipping costs have remained elevated since the start of the coronavirus pandemic, with transpacific freight costs around four times higher than the same period last year, and more than 10 times higher than pre-pandemic levels, Freightos’ data shows.
Shipping times have also shot up during the pandemic, causing delays in shipments and the turnaround of containers.
The average transit time from Chinese base ports to the US West Coast ports of Los Angeles and Long Beach has increased from 19 to 36 days since May, according to digital freight forwarding company Shifl, as congestions at ports on both sides accumulated due to Covid-19 outbreaks among port workers and strict disease prevention measures.
Despite the Biden administration’s push to address the logistic disruptions, the congestion at US ports have so far seen little improvement, as 70 container vessels were waiting outside Los Angeles and Long Beach as of Tuesday, according to Lars Jensen, CEO of liner consultancy firm Vespucci Maritime.
The imbalance of container distribution has been exacerbated in the past year between different markets due to supply chain and logistics disruptions.
In major exporting countries in Asia, sellers are scrambling to find available containers to load goods, while in the US, Europe and Australia, empty containers are piling up at ports, delaying their return.
This was the driving force behind the rise in the price of containers, Drewry maritime consultancy said in a report in August.
The prices of dry-freight shipping containers has more than doubled over the past year, but Drewry expects some easing after the third quarter.
The prices in China have also been pushed up by middlemen agents hoarding and speculating on units amid strong demand and tight supply, exporters say.
The high cost of shipping has become one of the biggest problems for the Chinese supply chain with prices of low-cost goods rising due to the higher shipping costs, forcing some manufacturers to cancel orders to preserve profit margins.
