For the very first time this year, global average container prices have soared. At an average of 5.4% for the 20-foot DC and by 15% for the 40-foot HC, this is quite a jump. However, in China, the average container prices as well as the leasing rates continue to decline – even after the country reopens from massive lockdowns.
Where are all the containers?
A monthly logistics report entitled “Where are all the containers”, published by Container xChange, contained these interesting insights. “We expect a surge of containers onto the transpacific, leading to higher utilization of vessels on this route. We could see a surge in spot rates, especially with the upcoming peak season,” said Christian Roeloffs, co-founder and CEO of Container xChange. With Shanghai still in lockdown at the time, and Tianjin still in lockdown, all of China is affected. Since Shanghai is the main car parts hub, and Shenzhen is the main site for car assembly, nothing can move.
A decline in Consumer Demand for Goods
Goods consumption is up about 5% from before the pandemic, which is down from a peak gap of 15%. However, the demand wasn’t ever the massive price driver. Containers just took much longer than before, so there wasn’t enough of a supply of containers. A slight reduction in demand won’t necessarily be a massive driver of a market change – but it will likely contribute. Overall, consumer demand was not the culprit for market destabilization. Rather, it was a combination of supply shock and a longer route from point A to point B.
As container prices increase, we will continue to keep an eye on this trend and the factors affecting it. We understand that cost increases are never ideal, but it’s important to understand why they’re happening.