Container Prices Double Amid Tripling Leasing Rates In China

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The average container prices in China have reached their highest in two years, at $3600 this week for 40 ft high cube cargo-worthy containers in China. These prices were somewhere around $1700 in March – April 2024. This is a 112% increase in two months.

Upward Trend 

While the average container prices (for purchasing containers) are on a significantly upward trend, the average one-way pick-up charges (for leasing containers) continue to develop at a staggering rate so far in June.

While prices and rates are significantly up, trading volumes have decreased as buyers are becoming more cautious. This trend potentially indicates a potential reversal of prices shortly, as the market adjusts to the current disruptions and the high levels of volatility.” shared Christian Roeloffs, cofounder and CEO of Container xChange. 

Leasing Rates on China to Europe 

The average pickup charges ex Shanghai to Rotterdam were somewhere around $500 in November 2023 which is now 3X, somewhere around $1700, to Hamburg is $2030, and to Antwerp is $1888.

Impact of Positive US Retail Trends 

  • US Retail Inventories and Sales Growth: The Monthly Retail Trade Survey shows a consistent rise in US retail inventories, from $769.3 billion in January to $793.5 billion in April 2024. Significant increases are seen in sectors like motor vehicle and parts dealers and building materials.
  • Continued Retail Sales Growth: In May, retail sales increased by 0.1% month over month and 2.3% year over year, with core retail sales (excluding automobile dealers, gasoline stations, and restaurants) rising by 0.3% month over month and 2.9% year over year. This aligns with NRF’s forecast for a 2.5% to 3.5% increase in retail sales for 2024.

The rise in US retail inventories, particularly in sectors like motor vehicles and building materials, indicates strong demand for container shipping services. This is expected to increase the need for container shipments from China, a major manufacturing hub.

Encouraging Growth in China’s Container Throughput

  • China’s ports recorded a 9% YoY increase in container throughput in the first four months of 2024, handling 104.03 million TEUs. Foreign trade cargo throughput increased by 9.1% YoY
  • Total cargo throughput reached 5.55 billion tonnes; a 5.2% rise compared to the same period last year.

Sanctions and Tariffs to Impact Euro-China Trade

The European Commission has proposed tariffs of up to 38% on Chinese electric vehicles, in addition to the existing 10% tariff, citing concerns over state subsidies. While the Container shipping sector is not directly impacted by these EV tariffs, we view this development as an early signal of potential broader trade tensions. If the proposed tariffs are implemented, the cost of exporting Chinese EVs to Europe will rise, possibly leading to a tariff war. This escalation could result in increased tariffs on a wider range of goods, impacting global supply chains. Higher tariffs and trade barriers could lead to delays and additional costs in the supply chain, causing inefficiencies in container utilization and higher operational costs for shipping companies.

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Source: Ajot