‘Shipper’s market’ forecast as container prices stay firm

‘Shipper’s market’ forecast as container prices stay firm
Container prices remained stable in July, indicating a market improvement that offers favorable conditions for shippers entering the peak season
• A majority of 2,570 supply chain professionals surveyed in July are hopeful of a container market rebound, container market forecaster Container xChange reveals
• CxC’s Container Price Sentiment Index reflects positive outlook

July container prices remained firm despite market fluctuations, boding well for a “shippers’ market” this peak season, Container xChange (CxC), an online container logistics platform, says in its August Container Market Forecaster report published on August 14.

The Container Price Sentiment Index (xCPSI) showed resilience and witnessed growth in July compared with June, said CxC, which noted that container prices had been relatively stable over the past 30 days (July) as against the previous 90 days (May-July).

In July, 2,570 supply chain professionals participated in the xCPSI survey. While their opinions varied, a dominant 42% of the respondents said they foresee an increase in container prices in the near term, which is indicative of potential market improvement. A further fall in container prices was predicted by 28%, suggesting a degree of pessimism in market conditions, while 30% said prices would stay unchanged.

CxC said this growth in sentiment underscores the industry’s expectation of an imminent turnaround, contributing positivity to the landscape.

Container industry stabilizing amid market fluctuations

Average container prices have been relatively stable in the last 30 days (in July), as against the price volatility over the past 90 days in May-July, CxC said.

Analyzing a 30-day price delta comparison across key regions, CxC said the market has witnessed average price fluctuations ranging from -4% to +5.20% in July 2023. However, container prices had dipped over a 90-day period, with Southeast Asia reporting a substantial -15.73% fall May-July.

Even so, the sentiment index stayed strong, even growing in July. The alignment of sentiment and pricing trends suggests an industry outlook that foresees a turning point, shifting away from skepticism towards a shared expectation of market recovery despite ongoing price adjustments.

Asian ports have been witnessing steady changes in average container prices for 40 HC (high cube) cargo-worthy containers. For shippers engaging in container trading or leasing within Southeast Asia at present, compared with three months or even just one month ago, presents a viable business prospect.

Fitch Ratings said China saw a 6% year-on-year rise in container throughput in Q2 2023, significantly higher than the 3% growth in Q1 2023. This was propelled by intensifying trade under the Regional Comprehensive Economic Partnership (RCEP), opening of new foreign trade routes at Dalian, and an upward trade trajectory with nations in the Belt and Road Initiative.

A surge in container demand on the intra-Asia trade lanes was observed on the platform, for example, the China-India stretch was popular in July on Container xChange.

Leasing charges for 40 ft HC containers on stretches ex-China are among the top 10 stretches on xChange Insights indicating a bounce-back from low leasing pick-up charges over the last few months.

Drewry points towards Asia’s entry into a peak season resulting in a 42% surge in the Shanghai-Los Angeles spot rate over a four-week period ending August 3. Simultaneously, the Drewry Shanghai-Rotterdam index also saw a 20% upswing within the same duration.

United States: A potential industry rebound

The Global Ports Tracker forecasts provided by the US National Retail Federation indicate import cargo volumes are poised to reach their peak in August 2023. This surge aligns with retailers’ preparations for the winter holiday season stocking.

Real GDP rose at an annual rate of 2.4% for April-June after rising 2% in Q1 2023, surpassing expectations and delaying recession concerns.

The S&P Global Flash US Manufacturing PMI was 49.0 in July, up from 46.3 in June, indicates market improvement. A 0.5% fall in wholesale inventories indicates US inventories are becoming leaner.

“As economists shift from predicting recession to a ‘soft landing’, the industry holds its momentum. While some experts remain cautious, the foundation of a resilient economy, sustained consumer activity, and strategic federal investments, improves the outlook of the upcoming holiday season,” said Roeloffs, cofounder and CEO of CxC.

“It’s a shipper’s market this peak season as rates stabilize at below pre-COVID levels and capacity is abundant. Prices are low and this offers a great opportunity for exporters this peak season.”

Eurozone emerges from technical recession

In the second quarter of 2023, seasonally adjusted GDP rose 0.3% in the euro area and was stable in the EU, compared with the previous quarter, said a preliminary flash estimate published by Eurostat, the statistical office of the European Union. In the first quarter of 2023, GDP had remained stable in the euro area and had risen 0.2% in EU, thus, avoiding a technical recession in the Eurozone.

“The shipping industry’s course for the next few months is intricately woven with economic shifts, trade dynamics, and supply chain adaptations. As we approach the holiday season, the industry’s resilience and adaptability will be put to the test,” CxC said.

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