Contract negotiations in the USWC and USEC logjams will hurt the coming peak season Overflowing depots in the US to pull average container prices further down
HAMBURG, Germany, April 28, 2022 /PRNewswire/ — According to a recent analysis by Container xChange (https://www.container-xchange.cn/) , one of the many challenges for the global supply chain now is the overflowing container depots in the US and the pileup of empties that will push the container prices further downwards in the mid-term.
The analysis shows that container prices are declining in the US by as much as 30% in the past two months across the east and the west coast and more than halved at some ports from 2021 prices. Bigger carriers, as per a report by CNBC recently, are shipping empty containers back to Asia from the US to increase profitability and ensure that the high-value cargo from Asia reaches back to the US where the demand is.
“In general, logjams and disruptions lead to increase in container prices, especially in second-hand container prices because more container volume is tied up along the logistic supply chain. However, in the United States, there is a pile-up of empties as those containers cannot be repatriated back to Asia because of several disruptions one after the other in the past 2 years.” said Christian Roeloffs, cofounder and CEO, Container xChange.
“We might see a continued slide in container prices because depots are overflowing of the containers. Carriers and other container owners will be getting desperate to get rid of those units. Once we see depots overflowing (and this is also what we expect in the midterm once disruptions ease up a little bit), container turnaround times becoming faster and shorter again, container fleet utilization (the number of trips that container can take on average within a given year) increasing again, we do believe that container availability on a global scale will become more abundant again.”
“As more and more containers will be required to be stored in depots in the US and because the depot space is limited, there will be a massive downward push on container prices in the immediate short to mid-term.”
The average container prices for 40 ft HC containers at the port of LA dropped by 20% since late February from $3467 to $2754 in April. These prices are expected to further decrease in the coming few weeks according to the xChange trading insights tool. Similarly, the average price for 20 ft DC at the port of Los Angeles is $1661 as of 11 April 2022. These were much higher in the year 2021, peaking at $3080 towards the end of August 2021. Almost halved since the last year.
Port Negotiations to disrupt the peak season shipping
“We know that the port labor unions are very aggressive negotiators, and the event has historically also resulted in work stoppages in the past. If that happens this year too, it will cause unloading and loading of cargo practically impossible. I am doubtful whether the negotiations are done within one and a half months because that’s effectively the time that we have before the current contract ends at the beginning of July. And it’s just doubtful whether the port and terminal unions will find an agreement with the employers by that time. This will of course lead to disruptions at the beginning of the early peak season shipping, a crucial time for the shipping industry, set to have implications on consumer demand fulfilment.”
“Beyond these US-centric disruptions, the global economic condition is creating many roadblocks for shippers, especially for small and medium-sized players. While the bigger companies do have an edge owing to the economies of scale at which they operate, smaller players are still struggling to devise strategies to pile up stock ahead of the peak season.”
About Container xChange
Container xChange is a technology company that offers container trading and leasing platform, payment infrastructure and efficient operating systems to container logistic companies world-wide. Covering the entire transaction process of shipping containers starting with finding new partners to tracking containers and managing payments, xChange makes using 3rd party equipment as easy as booking a hotel. We are on a mission to simplify the logistics of global trade.
Being one of the top ten logistics tech companies globally, xChange is fundamentally transforming thousands of processes involved in moving containers globally. xChange is trusted by more than 1000 container logistic companies such as Kuehne+Nagel, Seaco or Sarjak that use the neutral online platform every day to remove friction and to create economic opportunity.
xChange was founded by Christian Roeloffs and Dr. Johannes Schlingmeier in 2015 as a side project (an excel sheet) being a part of the Boston Consulting Group (BCG) in 2015. In 2017 the company was spun off as an independent, neutral business entity. Headquartered in Hamburg, Germany, xChange is now more than 240 employees from 65+ countries, making container operations smoother for 1000+ shipping companies.
A funded company, Container xChange acquired TankContainerFinder.com in 2021 to further strengthen its product offerings portfolio for tank containers trading and leasing capabilities. https://www.container-xchange.cn/
Ritika Kapoor, Comms and PR
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