Have container rental prices peaked?

“The recent surge in volumes and subsequent rise in container prices are largely due to increased orders, raising questions about the strength of underlying demand. If this demand weakens in the second half of 2024, we could see container prices and freight rates decline,” said Christian Roeloffs, co-founder and CEO of Container xChange, a global container trading and leasing platform.

In the short term, Container xChange reports that the average charter rate for the route freight Westbound traffic from China continued to increase throughout July.

Mr. Muhammad Farhan Khan, Managing Director at Sourcing Riders Ltd (Export Company) import in China), shared that demand for containers in China has been strong recently, especially for shipments to the US, due to increased consumer spending. Capacity constraints and disruptions on major shipping routes have led to a spike in rental rates. However, despite these challenges, container rates did not increase significantly in July, suggesting a more balanced market.

According to Mr. Farhan, the futures ocean freight rate for the first half of August on the China-US West Coast route has reached $8,800 per FEU, up from $8,200 per FEU in the first half of July.

The route from China to the US East Coast also increased to $9,700 per FEU from $9,100 in the first half of July.

Average container rates on the China-Europe route continued to rise but at a slower pace this month.

Container rates continue to rise on the China-to-US route, reflecting ongoing congestion and supply chain disruptions affecting the route.

Container rental prices on routes from China to the US West Coast (Long Beach, Los Angeles) are higher than on the East Coast.

The negotiations labor at East Coast and Gulf Coast ports poses a significant risk to shipping lines already facing extended transit times and rising costs. The International Longshoremen’s Association (ILA) contract, which covers 45,000 stevedores from Maine to Texas, expires on September 30.

While current data suggests container prices are likely to stabilize, the market remains sensitive to global economic conditions and trade dynamics.

Macroeconomic indicators from China paint a mixed picture. Home prices fell more than expected, down 4.5% year-on-year. Growth GDP also missed expectations at 4.7% compared to a forecast of 5% and retail sales rose just 2% year-on-year, lower than the forecast of 3.2%. On the other hand, export shows a positive trend, increasing by 3.6% year-on-year in the first 6 months of 2024.

Carriers and leasing companies are optimistic about further increases in commercial activity.

However, Christian Roeloffs, co-founder and CEO of Container xChange, said the current surge in demand is largely due to large retailers proactively managing inventory for the peak season, rather than a strong recovery in demand.

“Therefore, the possibility of container prices falling and stabilizing at lower levels is very high. The recent stabilization of container prices in China is consistent with our previous forecast, suggesting that the peak of the price increase may have been reached or is about to be reached,” he said.

According to VietnamBiz.vn