Container Prices Witness Sharp Jump on China-US and China-Euro Routes

Standing around USD 1,700 during March-April 2024, the prices have more than doubled to reach USD 3,600 this week for 40 ft high cube cargo-worthy containers in China. This marks a whopping 112% increase in a span of just 2 months.

On the other hand, the average one-way pick-up charges (for leasing containers) continue to develop at a staggering rate so far in June. The development of average pick-up charges for 40 ft-high cube cargo-worthy containers from the peak pandemic period till date (China to the US and Europe) has been represented below.

Christian Roeloffs (Co-Founder and CEO of Container xChange) revealed that trading volumes have seen a decline as consumers become cautious. He said that this may lead to a potential reversal of prices in the near future, as the market adjusts to the current disruptions and the high levels of volatility.

Overall, the pickup charges doubled since November until June Ex Shanghai to key ports in the US.  “We witness asking rates for leasing containers reaching USD 2,600 this week in China. This is crazy. Without any significant demand surge from the consumer side, these prices are increasing
only because of the disruptions at sea and not driven by demand, which worries us because this means it’s not sustainable, highly volatile,” shared a container supplier based in Shanghai.

While he mentioned that buyers and lessees are waiting it out, an immediate correction is not expected. “The market is too active, and freight demand continues to remain strong here in China,” he added. The rise in US retail inventories, particularly in sectors like motor vehicles and building materials, indicates strong demand for container shipping services. This is expected to increase the need for container shipments from China, a major manufacturing hub.

On the other hand, the European Commission has proposed tariffs of up to 38% on Chinese electric vehicles, in addition to the existing 10% tariff, citing concerns over state subsidies. While the Container shipping sector is not directly impacted by these EV tariffs, trade barriers could lead to delays and additional costs in the supply chain, causing inefficiencies in container utilization and higher operational costs for shipping companies.

Roleoffs suggested that container shipping companies should prepare for potential shifts in trade patterns by diversifying their routes and enhancing logistics capabilities in other growing markets. Investing in technology and infrastructure to improve efficiency and reduce costs will be critical in navigating the potential market volatility and maintaining competitiveness.