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The majority of 2,700-plus global supply chain professionals surveyed by Container xChange expect container prices to rebound in the near future
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Depot utilization is nearing capacity, and box yards are unable to accept new customers
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Shipping lines and leasing companies are holding off containers in a “wait and watch” strategy, but sell-offs not happening yet
Container prices are on the way to recovery, with most industry players predicting box price revival coming in the near term, says Hamburg-based Container xChange, an online container logistics company, in its March container market forecaster released on March 6.
While most industry participants foresee container prices recovering in the near term, Container xChange’s Container Price Sentiment Index (xCPSI) has recorded a positive value by March 1, 2023, following a price plunge in January.
The 2,700-plus industry professionals have taken part since February in the sentiment analysis polls where Container xChange sought their expectations on box price development in the near term.
These repeated surveys form a crucial element of the Container Price Sentiment Index (xCPSI), which shows how shipping professionals worldwide view how box prices develop in the months ahead. The positive trend Container xChange has seen since the last three recordings in early March shows the industry expects prices to improve soon, thus reviving confidence.
“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,” said Christian Roeloffs, cofounder and CEO of Container xChange.
“This is a global phenomenon now. And that is a struggle for the NVOCCs (non-vessel-operating common carriers) and shipping lines who want to open new markets.”
Container xChange provides a marketplace, an operating infrastructure, and a layer of services like payments, to container logistics companies globally.
Roeloffs said container oversupply has led depots to run on almost 90% utilization in countries like China, making it difficult for them to move the boxes around, eventually making them less efficient.
To put context, depots earn on handlings (gate movements) and not so much on storage. So, this development is also more painful for them in terms of contribution to operational inefficiencies than a contribution to revenue, he said.
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Agnieszka Polejewska, container depot department coordinator at Langowski Logistics Company based in Poland, said that for inland containers, not many boxes are seen on the yards.
“The production of new containers and their expanse on the ports in Europe and the USA can be overwhelming, as there are still a lot of old containers. But the production was, is and will be still working, as old, heavily used containers must be replaced,” Polejewska said.
“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.”
Container xChange observed that leasing companies and shipping lines are holding their containers longer than they would normally do, as they take a “wait-and-watch” strategy hoping prices will stabilize. Sell-offs are not happening yet because leasing and shipping companies have a free storage agreement with depots, so they don’t feel the storage fee pain.
“We do think that container selloffs will intensify into the Q2 or the second half of this year because depots will run out of space, prices will continue to erode, and shipping lines and leasing companies will need to sell off some of that stock, so the volume of second-hand containers and trading will increase in future and will further drive down the cost,” the online container platform said.
As geopolitical risks intensify, global economies are working towards diversifying their production, manufacturing, and container sourcing. The forecaster affirms that friend-shoring is happening.
On the diversification of trade lanes, Roeloffs comments: “The process of diversification has already started. Since this is a long-drawn process, we are yet to see visible signs of this in the trade patterns. But we see an uptick in intra-Asia trade.
“In the future, the larger trades will suffer a demand decrease so capacity needs to be adjusted towards regions with more sticky demand and more stable rate levels.
“For logistics stakeholders, there are more fragmented value chains to be dealt with, more growth to be discovered worldwide.Ultimately, we expect a broader base for business. This could be unleashed by the right set of data and insights to create a better ecosystem for companies.”
