30.09.2024
As Christian Roeloffs, cofounder and CEO of Container xChange, notes, “Container traders are uncertain, not just about the immediate direction of U.S. foreign policy but also about domestic economic stimuli, regulatory shifts, and potential changes in demand.”
Summary:
While elections themselves may not directly influence container prices, their downstream policy implications can have significant effects on the market. The upcoming U.S. elections carry substantial weight for the container trading industry, as the economic policies adopted by the next administration could shape trade dynamics, supply chains, and market sentiment for years to come.
Currently, container traders in the U.S. are grappling with uncertainty regarding how the election results might complicate their operational landscape, leading to hesitance in committing to long-term strategic initiatives. Given that container prices and availability are highly responsive to both global trade trends and domestic economic conditions, the outcome of the election—whether it favors Kamala Harris or Donald Trump—could chart distinctly different paths for the U.S. container market.
Our Estimation:
Our analysis indicates that container prices are likely to either remain stable or increase in the medium to long term, depending on the election outcome.
Survey Findings:
Our comprehensive surveys, conducted among container traders and logistics professionals, aim to gauge the anticipated impact of the upcoming U.S. presidential elections on the container trading market. The findings shed light on several key developments that market participants expect as a result of the elections. Here are some highlights from our surveys:
- Majority of supply chain professionals surveyed, foresee further spike in container prices in the U.S. because of the upcoming elections.
- Container price hike expectations are higher if Trump wins the elections, as compared to Harris. This is due to foreseeable restricted foreign trade and reduced container availability. Import tariffs and protectionist policies could drive a shortage of containers, leading to a price increase.
On the other hand, most respondents predict that container prices will remain stable if Harris wins elections. With no major disruptions to foreign trade, container supply is expected to flow consistently, keeping prices within their current range. - Respondents anticipate increased demand for containers domestically if Trump wins, as Trump’s policies are likely to stimulate business activities, infrastructure projects, and local manufacturing. A potential reduction in imported goods could also increase reliance on domestic containers.
In the scenario if Harris wins, The market expects moderate to stable demand for containers, as respondents believe that while Harris’s policies will maintain a steady economy, no significant surge in container usage is anticipated.
Key Market Drivers:
- Foreign Trade Policy:
Kamala Harris Victory: A Harris presidency is expected to largely maintain the status quo on foreign trade, reflecting the existing Democrat’s approach. There may be continuity in diplomatic negotiations and a cautious approach to new tariffs or import restrictions. As a result, there is unlikely to be a dramatic impact on the supply of containers entering the U.S., and traders can expect stability in cross-border flows.Donald Trump Victory: The U.S. presidency of Donald Trump from 2017 to 2020 was a turbulent time for shipping, marked by tariffs and trade wars. A Trump win this year could see a return to more aggressive trade policies, potentially reintroducing tariffs and restrictions on imports, especially from countries like China. This would likely reduce the flow of containers into the U.S., tightening the domestic supply. Trump’s protectionist stance may also lead to renegotiations of trade deals, introducing more unpredictability in global supply chains. - Domestic Economic Stimulation:Kamala Harris Victory: While Harris is expected to maintain a strong domestic economy, her administration may focus more on social spending and regulations that could modestly restrict business growth in certain sectors. However, the U.S. economy is robust enough that these policies are unlikely to cause major disruptions to domestic demand for containers. As Christian mentioned, “the domestic economy is strong and resilient at the moment,” which contributes to the stable demand outlook.Donald Trump Victory: Trump is expected to heavily emphasize economic stimulation through deregulation, tax cuts, and substantial investments in infrastructure and domestic production. This could lead to a surge in domestic demand for containers as businesses ramp up production and trade within U.S. borders. Christian noted that such measures would likely result in “an increase in both volumes and prices,” presenting a positive outlook for container traders.
Potential Impact on Container Traders:
Trump Victory Scenario: For container traders, a Trump win could create opportunities for those who can navigate a restricted supply environment. With fewer containers entering the U.S., traders might benefit from higher resale values for containers already in circulation. However, volatility in trade policies could pose risks, requiring traders to be more agile and adaptable. Christian emphasized that traders need to be ready and maintain a wide range of inventory to capitalize on potential market shifts.
Container traders could experience higher profits due to restricted supply and increased demand for domestic containers, but the volatility introduced by trade policies would require greater agility. Traders must adapt quickly to unpredictable shifts in trade flows and global market conditions.
Harris Victory Scenario: In contrast, a Harris win is likely to maintain the status quo for the container traders. Traders may not see a dramatic shift in either supply or demand, allowing for predictable pricing which will help in long-term planning.
Container traders will benefit from a steady trade environment, but they may face slightly higher operating costs due to labor and environmental regulations. The market would be predictable, allowing for longer-term planning with fewer risks of sudden disruptions.
Recommendations for Container Traders:
In Case of a Trump Victory:
- Capitalize on supply shortages: Container traders are seeing more favorable conditions for carrier-owned containers (COC) over shipper-owned containers (SOC). This shift is expected to lead to reduced SOC supply, driving up prices due to scarcity. With this in mind, traders should consider buying containers now and focusing on building up their seller network to prepare for the tightening market. This will help traders prepare for potential supply shortages by securing inventory early. Those with containers available may be able to command higher prices in a restricted market.
- Diversify supply chains: As foreign trade policies may become more unpredictable, diversify sources of containers and explore domestic suppliers to mitigate risks.
- Prepare for domestic growth: Consider aligning strategies with industries likely to benefit from Trump’s economic stimulation policies, such as construction, manufacturing, and infrastructure.
In Case of a Harris Victory:
- Maintain stability: Focus on long-term planning, as stability in container prices and demand can provide an environment where strategic growth is feasible.
- Monitor regulatory changes: While foreign trade policies may not change drastically, Harris’s administration could introduce new regulations impacting domestic business. Keep an eye on regulatory updates that might influence logistics and trade.
- Leverage international trade: With a stable trade environment, continue to pursue international opportunities without fear of major policy disruptions.
- Focus on growth: Utilize this current environment to explore growth avenues by adding new suppliers and expanding your network to prepare for changing market conditions in future. Strengthening supplier relationships can enhance your operational capacity and resilience in the market.