Container xChange China Market Update May 2024

23.05.2024

Survey: 75% of container traders and leasing companies surveyed from China report higher prices and tighter market

  • Leasing prices for 40 ft high cube containers in China go 2.5X in May
  • Average container prices in China significantly volatile for 40 ft High cube containers, customers report 88% spike in April-May
  • 75% of Container traders and leasing companies surveyed confirm tighter market, report extremely high prices for 40 ft high cube containers in China

A recent survey conducted by Container xChange with around 800 freight forwarders, container traders, and supply chain professionals in China confirms that the shipping container trading market has further tightened ‘significantly’ over the past two months. This tightening is reflected in the persistent rise in container prices and container leasing rates in China, driven by a demand upsurge for westbound trade from China.

Customers report 88% spike in average container prices in April-May

“While the numbers in the data show a much lesser average container price, the market is witnessing much higher container price in China, going as high as $3200 this week (week 21) for second hand 40 ft high cube, cargo-worthy containers, while these were somewhere around $1700 in March – April 2024. This is an 88% surge in 40 ft HC cargo worthy container price.” Shared a customer of Container xChange from China.

As per the official data, the average prices of 40 HC containers in China have risen by 17% in May as compared to April. Cargo worthy 40 ft high cube containers in Shanghai were priced at $2158 in April while these prices shot up to $2530 in May 2024 (as on 22 May 2024).  These prices have consistently climbed since November 2023, coinciding with the Houthi attacks on the Red Sea.

This development clearly reflects the impact of the Red Sea diversions on secondhand container market in China, as anxiousness to get the containers out of China mounts persistently month after month.

“While the numbers in the data show a much lesser average container price, the market is witnessing much higher container price in China, going as high as $3200 this week (week 21) for second hand 40 ft high cube, cargo-worthy containers, while these were somewhere around $1700 in March – April 2024. This is an 88% surge in 40 ft HC cargo worthy container price.” Shared a customer of Container xChange from China.

 The average one-way leasing rates being quoted in the market have also gone as high as 2480$ as on 21 May for 40 HC in China for the US-bound shipments which was somewhere around 950$ in the beginning of May. This is a significant jump in asking price for a 40 ft HC (cargo worthy) in China (roughly around 2.5X).

The European Union is considering implementing import tariffs to counteract subsidies for China’s electric vehicle (EV) industry. Similarly, the United States and other countries are increasingly focusing on reducing EV imports from China over time. Mexico and Brazil are also preparing for tariff increases and other trade restrictions, following Washington’s announcement of 100% tariffs on Chinese EVs on Tuesday. This move is likely to be followed by additional trade measures targeting Chinese electric vehicles by the U.S. and its allies.

“This situation is expected to have significant repercussions for the shipping sector, as vessel demand could decrease. In response, Chinese automotive and EV companies are working towards internationalizing their manufacturing, assembling and distribution processes to circumvent these tariff barriers. Immediate effects are already visible where the manufacturers are rushing to ship these EVs to prevent tariffs and future uncertainties.” Shares another customer of Container xChange from China.

“In an environment of heightened market volatility and encouraging demand recovery for global trade, container traders are gearing up for the second half of 2024, where we expect a cyclical rise in demand. This combination of heavier-than-expected demand for freight and anticipation of further demand surges in the second half of 2024 is driving up container trading prices in China. Many container sellers are holding onto their inventory, anticipating increased demand pressure for freight, especially since the second half of the year is typically a busier, more competitive, and profitable season for the shipping industry,” explained Christian Roeloffs, co-founder and CEO of Container xChange, an online marketplace for container trading and leasing.”

The demand has certainly resurged, giving a much-needed boost to the container shipping sector. And because the demand-supply imbalance has shrunk due to two factors compared to some six months back – one, the demand is better than before, giving clear signals of better times to come, and second, the capacity is tied up because of diversions. This changed equation of demand and supply leads to three key implications in the current as well as in the coming times:

One, container demand will grow stronger, and that is something that we have already seen in the last few weeks where container listings in the United States have shot up considerably on the platform. On the other hand, container shortages are clearly visible in China.

Two, following a surge in container demand, container prices are rising, which is very evident in the graphs that we see for Westbound trade.

And Three, freight rates are expected to increase as carriers capitalize on the higher demand and tighter supply.

Smaller and medium-sized enterprises (SMEs) might face greater challenges in securing containers and managing costs. This situation will call for a greater effort on strategizing to manage demand planning, and forecasting.

“Effective demand planning and forecasting are more critical than ever for the container shipping sector. Companies must adopt a proactive approach to anticipate market trends and prepare for future uncertainties.” adds Roeloffs.

Forecast for Future Container Price Development

The Container Price Sentiment Index (xCPSI) is a valuable tool that helps identify and anticipate short-term container price trends by measuring the industry’s expectations for container price development in the coming weeks. These surveys and polls, conducted weekly with supply chain professionals, provide an overview of expected container price movements.

Industry anticipates further container price hikes

Throughout 2024, the container price index has been significantly higher compared to the previous year. This indicates a positive shift in container price expectations among supply chain professionals worldwide.

The index readings were particularly high during the first two months of 2024. Although they gradually returned to lower levels, they remained significantly higher than the previous year’s readings. This trend aligns with the heightened market volatility caused by the Red Sea Houthi attacks and the subsequent rerouting of vessels through the Cape of Good Hope.

Continued sentiment volatility  – more container price hikes on its way

This week (Week 21) we witnessed mounting container price hikes expectations where the readings jumped from 37 points to 62 points. The fluctuations in the reading indicate market volatility in the container trading and leasing market.

For container leasing companies and traders in China, grasping these trends is essential for making informed business decisions. With higher container prices on the horizon, companies are already targeting holding more inventory to prepare for current and future demand.

For similar analysis and for xCPSI, please visit our market intelligence hub. Follow our LinkedIn page for timely updates.

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