According to a mid-year report from Container xChange, the global container logistics industry, having faced substantial price increases in the first half of 2024, is anticipated to see a cooling down of rates in the upcoming second half of the year.
Surge in container prices
Before detailing its forecast for the 6 months ahead, the report notes the dramatic increase in container prices across various regions that have occurred earlier this year. In June, for example, Hong Kong and Vietnam witnessed the largest month-on-month spike in average container prices, with a 35% rise from May.
This was followed by significant increases in China (27%), Russia (24%), Taiwan (23%), and Malaysia (23%). China, in particular, saw the largest container price hike since the Houthi attacks, with prices up by 78% since October 2023.
This surge in prices has been attributed to several factors, including ongoing geopolitical tensions, supply chain disruptions, and diversions around the Cape of Good Hope, which have led to congestion in major ports. The report states that these issues have caused importers in the US and Europe to pull forward orders typically reserved for Q3, creating a notable supply-demand imbalance.
Impact of Houthi attacks
Container xChange’s report also provides a region-wise analysis of the impact of the aforementioned Houthi attacks on container prices. The report notes that the Northeast Asia region experienced the biggest price increase, with China, Hong Kong, and Taiwan registering significant hikes.
Container prices have also been on an upward trajectory across Central Asia, the Middle East, the Indian Subcontinent (ISC) region, Japan, and Korea.
Tony Yu, president of Baiscon Shipping Line Hong Kong Co., Limited, highlighted that the North American market has seen a rise in container prices due to high procurement and leasing costs.
“From January to June of 2024, containers in the North American market were in a state of clearing inventory and prices showed signs of rising. It will continue to rise in the next few months, which is in line with the increase of container purchase price in the Chinese Mainland. The high cost of container procurement and container leasing lead to almost no difference between SOC freight and COC freight. Based on this performance, the lack of containers in some cities in North America is inevitable, which will drive up the sales price of containers,” said Yu.
This trend is expected to continue in the coming months, driven by a lack of containers in some cities in North America.
Market outlook for H2 2024
Looking ahead, Container xChange believes that in the second half of 2024 we will see a potential cooling of container rates.
With regards to this, Tony Yu emphasised the importance of considering several factors, such as the Red Sea crisis, China’s foreign trade exports, and potential changes in exchange rates.
“We need to consider several factors that affect the market: the Red Sea crisis and the subsequent diversions and the situation of China’s own foreign trade exports. If the situation does not improve, it will lead to strong container sales in North America. However, the influence of exchange rates cannot be ruled out. Should the Federal Reserve lower interest rates, the resulting appreciation of RMB could potentially have an auxiliary effect on the stability of container prices. Personally, I feel that there will not be too much change in the second half of the year,” added Yu.
Daniel Nee, president of Holyidea Logistics Equipment Manufacture Co., Ltd., also pointed out the ongoing complexities and unpredictability in the global landscape, which he says will continue to influence the container industry.
“As we look ahead to the second half of 2024, the global situation remains highly complex and unpredictable, leading us to anticipate further challenges in the container industry. The most significant factor shaping the market will be the geopolitical risks, and we must wait for changes on the global stage before making any definitive industry judgments. My advice to peers is to approach the market with patience and resilience. We are preparing for these uncertainties by waiting quietly and observing the evolving global context,” Nee was quoted as saying in the report.
Factors influencing market dynamics
Finally, the report also highlights the factors that are expected to influence market dynamics in the second half of 2024. Container xChange says that the Houthi attacks are likely to continue disrupting supply chains, in turn exacerbating market uncertainties. Additionally, the report states that labour unrest at US ports remains a significant potential disruption.
However, if the current market conditions persist without major changes, the report concludes that container rates could ease, triggering an uptick in container buyer activity.
Furthermore, the global container fleet grew by 10.6% between June 1, 2023, and June 1, 2024. According to Container xChange, the introduction of more container fleets into the market could help alleviate some of the price pressures, potentially stabilising the market and fostering increased trading activity.
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