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Classic 'boom and bust cycle' in container shipping industry

THE latest container logistics report published by Container xChange, an online platform for container logistic companies, shows that market volatility is causing the classic 'boom and bust cycle' in the container shipping industry.

The report highlights the fall in China's exports in September, the global economic downturn and the innumerable repercussions of the endless impacts of the war, the lockdowns in China and the port strikes as some of the major factors causing the present state of affair in the industry.

"What we now see is not unforeseen. The slowing down of demand and the glut of oversupply of containers are all a consequence of the disruptions caused since the outbreak of the pandemic. It is like the classic boom and bust cycle." said Christian Roeloffs, cofounder and CEO, Container xChange.

"There is a relatively low orders-to-inventory ratio. The retailers and the bigger buyers or shippers are more cautious about the outlook on demand and are ordering less. On the other hand, the congestion is easing with vessel waiting times reducing, ports operating at less capacity, and the container turnaround times decreasing which ultimately frees up the capacity in the market." Mr Roeloffs added.

Another key trend is the early signs of companies trying to diversify their sourcing strategy with Vietnam emerging as one of the key sourcing hubs.

Container xChange's data show that the price of a cargo-worthy 40 ft HC container in Ho Chi Minh City on September 22 was US$3,643, the third highest on the platform, indicating a high demand for 40 ft HC containers at the port.

"Not just the prices, the average pick-up rate of a cargo-worthy 20 ft from the port of Ho Chi Minh to the US dropped from $321 to $117 as well. For container users, it's perhaps the right time to leverage these rates as the country gears up in enhancing its export growth," the report explained.

On the other hand, the prices for cargo-worthy 40 DC boxes in the ports of China have seen a steady decline in 2022 - almost becoming half of what they were at the beginning of the year.

And though the ports of India and Vietnam too have seen similar decline, the trading prices seem to have stabilized over the last two months showing an increase in demand for these boxes at the ports of Mundra, Nhava Sheva, and Ho Chi Minh City.

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Classic 'boom and bust cycle' in container shipping industry
Classic 'boom and bust cycle' in container shipping industry

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