Container xChange China market update

Container trading and leasing rates decline in China ahead of the Golden Week

• China to US container leasing rates drop by 35%
• Average container trading prices in China decrease for the second consecutive month in September; remain 25% higher than last year’s average.

This month’s China market update is packed with developments that could potentially disrupt supply chains both within China and from China to key markets like the U.S. and Europe.

Typhoons slow down berthing times and container operations in key chinese ports

Last week, China experienced its worst typhoon in 75 years, making landfall on the east coast.

Hapag-Lloyd reports that ships are now facing delays of 36-60 hours to berth in Shanghai, while Ningbo faces waiting times of 24-48 hours. This bottleneck is expected to worsen as Typhoon Pulasan approaches, potentially exacerbating the already strained situation.

Several ports in Ningbo and Shanghai have announced the suspension of container operations.

East coast labor strikes affecting U.S.-bound shipments

On the U.S. front, the ongoing threat of labor strikes at East Coast ports has created uncertainty. These strikes are expected to affect operations at the ports in the east coast. This has led to an acceleration in orders over the past two to three months, with businesses pulling forward shipments to mitigate potential delays.

“In light of the recent robust U.S. economic growth, particularly in consumer spending (expected to rise 2.4% in 2024), businesses have been pulling forward shipments to mitigate potential delays. This consumer demand, coupled with a projected 3.8% increase in imports in 2024, represents the significance of timely shipping from China.” shared Christian Roeloffs, cofounder and CEO of Container xChange, an online global container trading and leasing marketplace based in Hamburg, Germany.

Golden week approaching; another factor for slowdown

Our regular surveys indicate that demand for U.S.-bound shipments from China remains strong, especially with Golden Week looming. Golden Week, starting October 1, traditionally causes a temporary slowdown in logistics activities across China, with a noticeable dip lasting between seven and ten days.

With these events in combination—the U.S. labor strikes, upcoming Golden Week, and port suspensions—the China-to-U.S. shipping route is set to be volatile and uncertain over the next 20 days.

Container market conditions in China: Softening demand and container prices

Despite these uncertainties, there is no significant congestion or market tightening within China itself. Several customers have reported a drop in container prices and lower COC (Carrier-Owned Container) rates, suggesting a softening demand for exports from China.

Average container prices on a downward trend

As of September 2024, average container prices in China have maintained their downward trajectory, with declines accelerating ahead of the Golden Week holidays. This drop reflects a broader reduction in demand for container shipments.

Prices have fallen by 25% year over year, from $3,012 in September 2023 to $2,525 in September 2024. This year, container prices peaked at $2,603 in July 2024 and have been decreasing for two consecutive months.

Leasing rates decline for the second month

Overall, China to US average one-way container leasing rates dropped by 35% from $1221 in the first week of August 2024, to $787 as on 23 September 2024.

Chart 2: Average one-way container leasing rates drop by 35% from Aug -Sep’24

Average one-way leasing rates for containers from Shanghai to Los Angeles have fallen for the second consecutive month. Rates dropped from $1,149 in July to $786 in August, and to $732 as of mid-September. Despite this decline, current rates remain elevated compared to the same period in 2023, when rates were $479. We anticipate these prices to stay relatively high through the rest of the year due to uncertainties surrounding U.S. East Coast strikes and the broader economic climate.

Industry insights and market outlook

The current challenge in the China market is the low Carrier-Owned Container (COC) rates, making it harder to send units to the U.S. This is compounded by high Pickup Charges (PUC), which have resulted in fewer Shipper-Owned Containers (SOC) reaching the U.S. Consequently, we might see rising prices for U.S.-bound shipments.

Container leasing demand is expected to slow as Golden Week approaches. Much of the Christmas and Black Friday inventory has already been shipped, with deliveries typically taking 30 to 60 days. Despite the ongoing challenges, there are no major reports of port congestion in China, though general trade volumes are declining, indicating a tougher economic environment. At present, securing containers is not an issue, though this may change as market conditions evolve.