Container owners struggle to return empties to China

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Container owners struggle to
Container xChange's latest monthly report says there is a glut of container supply while recessionary fears and inflation have softened consumer demand as the market enters the busiest time of the year. Photo from Pixabay
  • Empty boxes are piling up at US and European depots as container owners struggle to return them to China amid the peak shipping season
  • Disruptions caused by excess supply of empty containers in US and European ports will not ease until 2023, Container xChange co-founder and CEO Christian Roeloffs forecasts

Container owners struggle to return to China empty containers piling up in United States and European ports as major trucking and rail issues are making domestic cargo movement difficult, a container logistics industry monthly report says.

US West Coast labor talks that drove freight forwarders to reroute cargo to the East Coast recently have caused congestion in ports there, too, while acute shortage of truckers and rail delays are complicating the situation, said the September 9 report by Container xChange, a technology marketplace and operating platform for container logistics companies.

“What is happening in the US is that there is already congestion like every year because it is the peak shipping season, and everyone is trying to make sure that retailers have enough inventory on the shelves for the upcoming holiday season,” wrote Christian Roeloffs, co-founder and chief executive of Container xChange.

“All in all, there are many challenges that will impact a smooth container movement into the peak season. Empty containers piling up at the depots in the US and containers stuck on the sea (owing to the congestion) will contribute to capacity being tied up.”

Roeloffs said there is an excess of containers on the supply side as liners and container owners struggle to ship them back to China while recessionary fears and inflation have softened consumer demand as the market enters the busiest time of the year.

“The average container prices traditionally increase in China and Southeast Asia during the peak season, and we do expect prices to rise in the coming weeks,” said Roeloffs, who nevertheless expects a relatively small increase in average container prices this year due to the disruptions.

The report said the average prices of all types of cargo-worthy containers in the region rose from US$2,116 in July to $2,214 in August. It said the average container prices in US East Coast and West Coast ports are increasing, in contrast to declining average container prices worldwide.

The US saw a 7.3% month-on-month increase in trading prices for cargo-worthy containers of all types while Canada saw a 15.28% dip.

“This situation of empty containers piling up in the US and in Europe will lead to tighter depot space, carriers will rush to get rid of their older equipment, and second-hand container prices will continue to slide,” Roeloffs forecast.

While supply chain disruptions are slowly easing globally, no sure end to shipping troubles is in sight.

In week 35, US ports including Houston, Oakland, New York City, Savannah, Long Beach, and Los Angeles kept up their high Container Availability Index (CAx) scores of above 0.80 from last month. The ideal balance level is 0.50, meaning the same number of boxes is leaving and entering a given port. If the number rises, it means more containers are coming in than going out.

While the congestion seems to be easing in the ports on the West Coast, container movement in the US faces many problems before it improves.

“The lockdowns in China will further make the situation difficult for shippers and freight forwarders to move the cargo from China to the US,” Roeloffs said, warning of more chaos ahead.