According to an analysis from Container XChange, a container trading and leasing platform for shippers, the port congestion along the East and West Coasts and the pileup of empty containers is driving downward the freight prices.
he company forecasts that there will be a continuing downward pressure on container prices that is expected to last for the next few weeks.
Many ports in the U.S. resorted to opening up additional storage locations to manage the increase in empties. The Ports of Los Angeles and Long Beach proposed imposing surcharges on long dwell time empties. According to the analysis, U.S. container prices have declined as much as 30% in the past two months along both coasts, and by as much as 50% at some ports compared to 2021.
The Russia-Ukraine crisis and the COVID-19 related lockdowns in China have contributed to the stall of supply lines. Some large carriers are shipping empty containers back to Asia to increase profitability and ensure that the high-value cargo in the East makes its way to U.S. shores, where the demand is, according to the report. This is expected to continue as containers pile up.
In general, logjams and disruptions lead to increase in container prices, especially in second-hand container prices because more container volume is tied up along the logistic supply chain
…said Christian Roeloffs, cofounder and CEO, of Container xChange.
However, in the United States, there is a pileup of empties as those containers cannot be repatriated back to Asia because of several disruptions one after the other in the past two years, and more recently due to the China lockdowns and Russia Ukraine crisis
…Christian Roeloffs continued.
As disclosed, the current lockdowns in China have not done enough to positively impact the logjams in the short term. Container xChange also points to the number of vessels stuck off Shanghai and the goods that have piled up along the supply chain as truckers have been restricted in their movements.
There will be a lot of disruptions when the lockdowns are lifted, and vessels will storm the east as well as the west coast ports
…predicts Roeloffs, adding that there will be an added element of panic shipping that is going to make matters worse for the supply chain pressures and logjams in the U.S. where ports are already piled high with empties.
Carriers and other container owners will be getting desperate to get rid of those units
As more and more containers will be required to be stored in depots in the U.S. and because the depot space is limited, there will be a massive downward push on container prices in the immediate short to mid-term
According to the Predictive Maritime Intelligence company, Windward, 1 in 5 container vessels globally is waiting outside a congested port – of which 27.7% in China.
Last week, 477 bulk cargo ships were reported waiting to deliver resources from metal ore to grain into China, as the country’s lockdown is creating supply chain issues.
In addition, many carriers have said that reefer cargo, and some types of dangerous cargo, will be discharged at other locations as Shanghai has run out of available reefer plugs and space for certain types of DG cargo.
This is why, in late March, Maersk forecasted that the strict imposed lockdown in China will have a great impact on trucking services and will increase transport costs.