Indian Transport & Logistics
Shipping

Depots to face brunt of container surplus into 2023: Container xChange

Probable hike in container storage fee to disincentivise longer staying containers at depots

Depots to face brunt of container surplus into 2023: Container xChange
X

With industries witnessing high inventories and slow demand, there is a rippling effect across different stages of container logistics, according to the latest edition of the Container xChange Forecaster.

"One of the glaring issues which will impact container repositioning and container movement well into the year 2023 is insufficient depot space."

Christian Roeloffs, Co-Founder and CEO, Container xChange, says: "There is just not enough depot space to accommodate all the containers. With the further release of container inventory into the market (e.g., from the disposal of leasing fleets), there will be added pressure on depots in the coming months. This will be a key challenge for some and a competitive advantage for others in the business, especially in China because of the empty container repositioning there."

Retailers and companies are more cautious in their stock management strategy this peak season, which has technically not happened, as they adjust to the shorter cargo delivery cycle, the report said.

"There is enough inventory with retailers," says Johannes Schlingmeier, Co-Founder and CEO, Container xChange. "Once these inventories exhaust in North America and Europe, companies will order again, and demand for shipping capacity will pop back up. This won't go back to max pandemic levels but certainly be back to the long-term average upward trend. What has happened now is that the cargo is "on time" again and hence you'll see a slowdown in new ordering as companies adjust to this more efficient turnaround times in ocean freight delivery. For container owners, this could potentially mean a rise in container storage fee by depots as more containers pile up to disincentivise longer staying containers at the depots."

Container prices decline
The average container prices (for trading) and one-way pickup charges (for leasing) for standard containers declined to their lowest in two years in China. These were at $3,711 in October in China, declining further (so far) in November.

Container prices in China

Container availability Index (CAx) values are much higher than pre-pandemic – meaning inbound containers are significantly higher at the Chinese ports compared to 2019 (pre-pandemic) and since then.

"The declining rates and container prices indicate a weakening demand and surplus of containers. The wider this gap, the lower the container rates and prices. The logistic companies have already moved onto the planning for Chinese New Year because of the weak peak season this year", adds Roeloffs.

Average container prices fell 9 percent from $3,609 in September to $3,286 in October in the U.S.

Container prices in U.S.


Read Full Article
Next Story
Share it