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Home » Container prices jumped in May for first time in 2022

Container prices jumped in May for first time in 2022

Few empty containers are available, as China begins to reopen from covid shutdown and peak season restocking season looms, Container xChange says.

container xchange Screen Shot 2022-06-13 at 12.41.07 PM.png
June 13, 2022
DC Velocity Staff
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Under pressure from congestion at freight ports and depots worldwide, global average container prices increased in May for the first time in 2022, according to logistics technology provider Container xChange.

Now current events could amplify that trend, as China begins to reopen after a “massive” two months of covid lockdowns, issuing an expected flood of packed containers into the market, leaving few empty ones to be found, the German firm said in a report titled “Where are all the Containers?”

The only region where the average cost of buying a container has dropped is China itself, where the closure of ports, factories, retail stores, and residential areas has completely shuttered production, removing demand for freight services.

“We expect a surge of containers onto the transpacific, leading to higher utilization of vessels on this route. We could see a surge in spot rates especially with the upcoming peak season,” Christian Roeloffs, cofounder and CEO of Container xChange, said in a release.

“Not only Shanghai was in lockdown, right now Beijing and its biggest harbour Tianjin is still in lockdown. All cities are so interlinked that it influences the whole of China,” Roeloffs said. “For instance, Shanghai is the main hub to produce car parts and Shenzhen is for assembly. Since no parts are dispatched to Shenzhen, nothing can get assembled and thus exports out of Shenzhen also experience slow down.”

By the numbers, Container xChange found that average container prices globally soared in May by 5.4% (from $2,207 to $2,330) for a 20-foot dry cargo (DC) box and by 15% (from $3,800 to $4,410) for a 40-foot high cube (HC) box, compared to the month before.

The numbers rose despite a slight softening of consumer demand, which is traditionally a stalwart of the U.S. economy. “A metric cited by Goldman Sachs shows goods consumption about 5% higher from before the pandemic, down from a peak gap of 15%,” Roeloffs said. “However, the demand side was never really the massive driver of the price increase on the rates. Owing to the supply chain shocks, the containers just took much longer than before and hence there was just not enough supply of containers which coupled with a little bit of an increase in demand and led to this situation that we faced. So, I don't think that slight reduction in demand will be a massive driver of market changes but of course, it will contribute.”

In reaction, global freight markets are likely to drive a gradual increase in demand for smaller vessels meant for smaller trade networks, as a way to cope with the emergence of increasingly complex networks with more stops and longer turnaround times, Container XChange said. By reimagining supply chain routes and transhipment lanes, companies hope to build resilience, lower their reliance on bigger trade blocks, and diversify supply chain risks.
 

Containers
KEYWORDS Container xChange
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