A container market projection for March has been made available by Hamburg-based Container xChange, an online platform for container logistics, as reported by Container News.
Changing container prices
Container xChange indicated that the Container Price Sentiment Index (xCPSI) is anticipated to be positive by the beginning of March 2023, despite the fact that the majority of industry participants predict a recovery in container prices in the upcoming months.
Since February, over 2,700 industry professionals have completed mood analysis questionnaires from Container xChange asking for their predictions on how container prices will change over the coming months.
The Container Price Sentiment Index (xCPSI), which depicts how shipping professionals throughout the world anticipate container costs to change in the future, heavily relies on these recurring surveys.
Since the last three recordings in early March, there has been an upward trend, which shows that the container market expects prices to increase soon.
New opened markets
“We learn from many customers of Container xChange that the demand for containers is still there, just that the supply is overshooting the demand. Due to this, we see ripple impacts like for example, depots working on max capacity (Depots in China for instance working on 90% utilization) and therefore, not being able to accept new clients. This is a global phenomenon now. And that is a struggle for the NVOCCs and shipping lines who want to open new markets,” commented Christian Roeloffs, co-founder and CEO of Container xChange.
The report claims that the excess supply of containers has caused depots in nations like China to run at close to 90% capacity, making it challenging for depots to move boxes and, as a result, decreasing depot effectiveness.
As a result, the report observed, this growth is even more difficult for depots because it contributes to operational inefficiencies rather than revenue. This means that depots gain money through handling (gate moves) rather than storage.
“But the production was, is and will still be working, as old, heavily used containers must be replaced. We must wait it out till the end of the Q1 of 2023 to see how this situation is developing because of so many disruptions in our industry,” pointed out Agnieszka Polejewska, container depot department coordinator of Langowski Logistics, a company based in Poland.
Container xChange also found that shipping companies and rental companies are keeping their containers on the market longer than usual, choosing to take a wait-and-see attitude in the hopes that prices will level off.
Change in trade pattern
According to Container xChange, the rental and transportation companies have a free storage arrangement with the depots, so sell-offs are also not happening. As a result, they are not concerned about storage costs and will wait until prices stabilise.
The analysis also pointed out that, in order for the volume of second containers and trading to increase, shipping lines and leasing companies will need to sell off some of that stock as depots will run out of space, prices will continue to decline, and container selloffs will intensify in the second half of this year.
Although diversification is a “long-drawn process,” according to Christian Roeloffs, we have not yet noticed any obvious changes in trade patterns.
However, Roeloffs said that there is an increase in intra-Asian trade “Future demand reductions will affect the larger transactions, therefore capacity needs to be shifted towards areas with more persistent demand and stable rate levels. In the upcoming years, supply chains will need to be more resilient. With the help of these relocation tactics, dependency on a single manufacturing and supply chain hub will be effectively reduced in favour of a more varied, compact trading pattern.”
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Source: Container News
