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Strong demand for containers in Southeast Asia this peak season for shipping is driving up prices and lease rates, as China prices decline amid COVID cares
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Container xChange says the strength of Southeast Asian countries’ trade, reflected by the surge in container prices, validates the “China+1” strategy
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The region’s growing containerized trade indicates a favorable environment for regional shippers and exporters, the online container platform says
Southeast Asian peak season container prices climbed 36% and one-way leasing rates rose 21% in August amid strong demand, as COVID-wary giant China saw demand for boxes decline during the busiest season for shipping, Container xChange says in a new report.
This trend of rising peak season container prices and leasing rates in Vietnam, Malaysia and Singapore, among other Southeast Asian countries, validates the “China Plus One” strategy adopted by foreign companies, said the report on Hellenic Shipping.
In July-August, the average prices of 20-foot equivalent (TEU) dry cargo containers fell 10% from US$2,106 to $1,890 on the Container xChange platform. And for 40-foot equivalent unit (FEU) high-ceiling containers, prices in those two months fell about 11% from $3,800 to $3,384.
The average leasing rates for containers of all types and conditions from China to the rest of the world fell from $1,454 in July to $1,080 in August. These market trends strongly indicate that demand from the US and Europe has softened, Container xChange said.
Container xChange’s platform shows that the average trading prices of containers in Southeast Asian ports had risen 36% from $2,300 in July to $3,133 in August. On the stretch from Southeast Asia to the United States, the average leasing rates for cargo-worthy containers rose from $607 in July to $738 in August, the report said.
China’s recent official customs data showed the country’s exports had seen a soft rise of 7.1%, lower than official expectations of a 13% increase.
For 20-TEU dry containers, the average trading prices in the Southeast Asia rose from $1,951 in July to $2,056 in August.
Shanghai maintained a score of above 0.58 on the container availability index (CAx) in week 35, while other major ports in China scored high, such as Qingdao with above 0.8 and Tianjin above 0.7. These high scores indicate less demand for export containers than full imports at these ports and decreased container rental fees, and this trend is predicted to continue.
Whereas, in pre-COVID times, in 2019 week 35, Shanghai had a CAx score of 0.44, Qingdao was at 0.44, and Tianjin was at 0.52, indicating more containers left these ports than those that entered.
To put things in perspective, with consumption patterns changing amid tighter financial conditions due to high inflation, foreign demand for Chinese goods is being dented. Recent media reports said manufacturing and production have taken a hit in China, leading the global supply chain to resort to alternative Southeast Asian countries like Singapore, Malaysia, and Vietnam, among other sources.
Commenting on the recent global trading routes diverting to alterative Southeast Asian countries, Christian Roeloffs, co-founder and chief executive of Container xChange, said the region’s growing containerized trade indicates a favorable environment for regional shippers and exporters.
“For global container shipping companies that are looking to diversify their cargo trade lanes from linear to more distributed routes, countries like Malaysia, Vietnam, and Singapore are emerging as strong contenders, more so for a China + 1 strategy in the long term,” Roeloffs said.
“The industry is witnessing the perils of reliance on linear supply chains over the past two years. The growing possibility of adding more Southeast Asian countries to the emerging trade routes will reduce the dependence of containerized trade on only one or two countries, thus minimizing the impact on global supply chains.”
