The latest report from Container xChange, a Container leasing and trading platform, shows a glut of containers is driving down prices for used containers.
Peak season comes, container prices in the short term or maintain stability
Christian Roeloffs, co-founder and CEO of Container xChange, said the pandemic led to panic orders for new boxes, driving orders to record levels. But over time, the shipping market gradually returned to normal, and the oversupply is a natural result of the rebalancing of supply and demand in the market. The data show that the global average container price and rent have been on a downward trend since September-October 2021.
- Short and medium term outlook –
Container rates have fallen by about 20 per cent on average since the start of 2022, while used container prices have fallen by between a quarter and a third in the 11 months since August 2021.
Container prices fell the most at Chinese hubs and major Nordic container ports. Container prices at the ports of Shanghai, Ningbo and Qingdao were around $6,000 in August 2021. By June, they had fallen to nearly $4,000, a drop of up to a third. The ports of Rotterdam, Hamburg and Antwerp saw similar drops in container prices, from more than $4,000 to less than $3,000. Prices at U.S. ports were more volatile, with container prices dropping from $3,500 to $4,000 to nearly $3,000, but prices at Southern California ports rebounded from lows in April to $3,500 to $3,700 in June.
Global inflation and lockdowns caused by the pandemic will continue to change the balance between supply, demand and prices. In the long run, these factors will gradually subside and a new supply-demand balance will be reached.
The latest figures released by Delury show that the global surplus of containers exceeds 6 million TEU. Container xChange further notes that oversupply will lead to demand for more warehouse space, which is already scarce. This will make shipping lines eager to sell old container equipment, driving the price of used containers gradually down until it reaches a new equilibrium point. And the new box market will shrink.
- Demand increases during peak season
Imports fell 2.4 per cent between March and April, with purchases of goods falling by $100m. A 1.8 billion increase in industrial supplies and materials was offset by a 1.5 billion drop in consumer goods imports. In the long run, there will be no significant decline in shipping demand without a sharp fall in global GDP.
Container xChange expects pent-up peak season demand to drive a sharp rise in Container prices, which may remain stable in the short term. It remains to be seen how the geopolitical situation and the epidemic will evolve in the coming months.