U.S. East Coast Dockworkers’ Strike – Key Insights for Container Traders and Leasing Companies

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U.S. East Coast Dockworkers’ Strike – Key Insights for Container Traders and Leasing Companies

October 3rd, 2024 Container xChange Leave a comment

At 12:01 a.m. on October 01, 2024, the International Longshoremen’s Association initiated a strike that has led to the closure of U.S. East Coast and Gulf Coast ports, disrupting the flow of both import and export containers, and impacting overall container operations.

In our previous advisory dated 26 September 2024, we covered the potential impacts on supply chains, including stranded cargo and skyrocketing costs. Now, with the strike already in effect, the situation has escalated, with ripple effects spreading across the U.S. economy.

What Our Customers Are Saying:

Container traders and leasing companies have expressed growing concern over the potential length and severity of the strike. One of our U.S. based customers highlighted:

“Surcharges are climbing, and rerouting is making it harder for small businesses to maintain supply chains. If this continues, securing containers in time for the holiday season will be nearly impossible for container traders like us. Some depots don’t have anyone there to load our drivers, and other depots are setting appointments because they have so many releases and can’t handle all the drivers.”

Others, especially small and medium-sized container traders, are already struggling to absorb these new costs as carriers impose surcharges and adjust services to bypass affected ports. The outlook remains uncertain, with many bracing for further delays and price increases.

However, this also offers opportunities for price increases on existing inventory—a trend that can already be observed on the xChange marketplace. For instance, since July 2024, there has been a steady upward trend in average container trading prices in key North American locations like Chicago, Dallas, Houston, and Montreal, with Denver experiencing a noticeable price spike.

This price rise is positive news for container traders as higher prices generally indicate a healthier market for container trading.

James Langley, from Container Solutions & Designs, LLC, emphasized the difficulties faced at depots during the strike:

“We expected that with the strike, and fewer depots allowing units to IN-GATE, it would be easier to pick up units. But what we’re seeing is that it takes 4-5 hours waiting outside depots, and even then, only when windows are open. On major depots, it’s taking about three weeks just to get an appointment.”

Rob Golliher from Freedom Conex highlighted further operational challenges:

“We think this will impact us over the next couple of months by slowing down deliveries and we suspect there may be more release issues at the depot due to lack of personnel. I don’t think it will be great for our customers or the industry.”

Maersk shared as part of its advisory on 01 October 2024 to “hold all empty containers until the labor disruption has ceased. At this time, we do not have alternative empty depots planned.” Maersk is processing export bookings as usual but has halted bookings for refrigerated containers through ILA-impacted ports.

Maersk’s operational teams have prepared vessel-level contingencies, depending on how long the labor dispute lasts, and encourage customers to reach out for inland routing options through West Coast ports.

Impact and Cost Implications

Christian Roeloffs, cofounder and CEO of Container xChange, provided a detailed analysis of the situation:

“The timing of this strike is especially challenging as we are in our traditional peak season. While many pulled forward shipments earlier this year to mitigate risks, stockpiled inventories will only cushion businesses for so long. If the strike continues for an extended period, we could see significant strain on container availability and shipping schedules.”

For smaller traders, the stakes are particularly high:

“For small and medium-sized container traders, this could result in skyrocketing logistics costs and delays, making it harder to secure containers. The longer the disruption lasts, the more difficult it will be for these businesses to keep pace with market demands. It’s crucial for traders to cultivate a strong network of reliable suppliers during such challenging times” Roeloffs added.

Estimates of the strike’s economic impact vary significantly based on its duration. If the strike lasts only a few days, the overall financial damage could be limited to several billion dollars.

Key sectors, including electronics, auto manufacturing, and consumer goods, face risks of shortages and price hikes, amplifying the financial strain across the supply chain.

Companies heavily reliant on imports, particularly in retail, are likely to face the highest costs as logistics challenges mount in the lead-up to the holiday season. In the longer term, an extended strike could even result in layoffs in sectors heavily dependent on timely shipping.

President Biden’s Statement:

President Joe Biden weighed in on the negotiations, urging USMX to return to the table and offer dockworkers a fair wage that reflects their essential role in the U.S. economy. He highlighted that ocean carriers have seen record profits since the pandemic, with some profits increasing over 800% compared to pre-pandemic levels.

“Now is not the time for ocean carriers to refuse to negotiate a fair wage for these essential workers while raking in record profits,” Biden said in a statement, emphasizing the critical role dockworkers play in supporting the nation’s recovery, especially in the aftermath of Hurricane Helene.

The President also noted that his administration will closely monitor for any “price gouging” activity benefiting foreign ocean carriers, which could worsen the financial burden on American businesses.

Hapag-Lloyd anticipates significant disruptions to services at the affected ports, with the strike likely causing a backlog of vessels even after it concludes.

Carrier Adjustments:

Major carriers, including MSC, Maersk, Hapag-Lloyd, and CMA CGM, have announced surcharges and rerouting plans. MSC has diverted vessels to Halifax, while Hapag-Lloyd is imposing a $1,000 “Work Disruption Surcharge” per TEU starting on October 18. CMA CGM has also announced surcharges ranging from $800 to $1,500 per TEU, effective from October 11.

Looking Ahead

The U.S. dockworkers’ strike presents an major challenge for container traders and leasing companies, with surging costs, delays, and significant uncertainty ahead. As Christian Roeloffs advises, flexibility and proactive planning will be critical. Companies should secure container availability early, explore flexible leasing agreements, and stay updated on carrier announcements to mitigate the strike’s impact on their operations.

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U.S. East Coast Strikes

September 27th, 2024 Container xChange Leave a comment

As the October 1 deadline for a potential U.S. East Coast port nears, industries across the nation are bracing for significant disruptions. The labor impasse between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) threatens to halt operations and cause damage to supply chains and to the economy. With key East Coast ports such as New York, New Jersey, and Baltimore in the crosshairs, the ripple effects could devastate supply chains, consumer markets, and broader economic sectors.

What’s at Stake?

If the strike begins on October 1, it’s estimated that the resulting supply chain disruptions could cost the U.S. economy over $1 billion per day.

Essential goods, including imported retail items, automotive parts, and perishables could be stranded at ports or rerouted at considerable expense. Oxford Economics warns that a prolonged strike could impact up to 100,000 jobs, exacerbating the pressure on businesses already grappling with inflation and the aftermath of previous supply chain crises.

The East Coast ports are critical gateways for a range of industries. Retailers are rushing to secure holiday inventory as the strike coincides with peak shopping season preparations. Companies have been importing early, shifting cargo to the West Coast, and even opting for costly air freight to avoid potential delays.

Commenting on the broader implications of the strike for containerized trade, Christian Roeloffs, cofounder and CEO of Container xChange, said, “The strike could push the container trade into chaos, with ripple effects that potentially will disrupt supply chains well. The congestion and delays at these major ports will severely impact the availability of containers, increase costs, and disrupt schedules. Small traders, in particular, may feel the squeeze as they are more vulnerable to price surges and extended delays in securing and moving their boxes. Businesses are acting now to reroute shipments and secure their container supply, or they risk being left stranded in a congested and costly aftermath.”

The fallout from a strike would hit industries like retail, automotive, and manufacturing hardest. Retailers, for example, are already rushing to import goods ahead of the holiday season. Without contingency plans, many companies will face severe shortages, missed deadlines, and skyrocketing logistics costs. Roeloffs further emphasizes the risk to small traders:

“For small traders, the consequences could be devastating—skyrocketing costs, container shortages, and delays that might cripple business operations.” Roeloffs added.

Immediate Supply Chain Challenges

1. Stranded Cargo: With 42 container ships scheduled to arrive at the Port of New York and New Jersey alone in the coming days, any work stoppage could leave cargo stranded in transit. Shipping lines such as Ocean Network Express (ONE) are already advising customers to pick up their containers by September 30 and avoid leaving perishable or hazardous materials at the terminals.

2. Rerouting Challenges: Redirecting shipments to West Coast ports or alternate East Coast ports could create a logistical bottleneck, especially for goods requiring passage through the Panama Canal.

3. Cost Escalations: Maersk has already announced a disruption surcharge for all cargo moving to and from U.S. East and Gulf Coast terminals, starting on October 21. The surcharge will be $1,500 per twenty-foot equivalent unit (TEU) and $3,000 per forty-foot equivalent unit (FEU), depending on the extent of the supply chain disruption.

Hapag-Lloyd plans to implement a “Work Interruption Destination Surcharge” for imports from East Asia on October 19, and a “Work Disruption Surcharge” for cargo from the rest of the world on October 18, both at $1,000 per TEU. CMA CGM will introduce an export surcharge on October 11, set at $800 per TEU and $1,000 per FEU, with a $1,500 per TEU import surcharge. Additionally, starting November 1, they will apply a $1,000 peak season surcharge for imports from the Indian Subcontinent and the Middle East, delayed from the original October 1 date.

Ocean Network Express (ONE) has yet to finalize its surcharge strategy but has cautioned customers about possible booking changes, including vessel rollovers or cancellations, beginning this week.

These additional costs are likely to be passed on to consumers, impacting a wide range of goods from holiday products to industrial supplies.

Even if the strike is short-lived, the backlog of cargo will lead to delays as ports struggle to clear stranded containers.

Sector-Specific Impacts

The retail sector, particularly those dependent on imports from Europe and Asia, will bear the brunt of the delays. Critical holiday merchandise, including apparel, electronics, and seasonal goods, may not arrive on time.

“The automotive industry, which relies heavily on timely shipments of parts and components, could see production delays, especially for vehicles assembled in the U.S. with parts arriving through East Coast ports. “Each day of the strike could mean five days of delays for businesses already struggling with tight margins and timelines. For many, this could be the breaking point,” says Roeloffs, emphasizing the logistical strain.

Roeloffs notes, “The cost of shipping will skyrocket, and ultimately, it’s the consumer who will bear the brunt—whether they’re buying holiday gifts or essential auto parts.”

Strategic Recommendations for Supply Chain participants

To mitigate the impact of the potential strike, supply chain managers must adopt proactive strategies:

1. Reroute Shipments: Where possible, divert cargo to alternative ports on the West Coast or Gulf Coast. Although this may require additional transit time through the Panama Canal or air freight options, it’s essential to explore all available alternatives to avoid delays at East Coast ports.

2. Prioritize High-Value and Critical Goods: For industries like automotive and retail, it’s crucial to prioritize high-value, high-demand products that cannot afford delays. Companies like Designer Brands have already shifted some of their shipments to air freight despite the higher costs. Roeloffs advises:

3. Expedite Customs and Clearance: Businesses should work closely with freight forwarders and customs agents to expedite the processing of goods already en route. Shipping lines like Maersk and ONE have encouraged customers to expedite their imports to avoid potential shutdowns.

4. Leverage Additional Gate Hours: Ports such as New York and New Jersey are extending their gate hours ahead of the strike deadline. Utilizing these extra hours to clear inbound shipments will help companies avoid the backlog that is expected if the strike occurs. Terminal operators APM Terminals, Maher and Port Newark Container Terminal will have extended gate hours.

5. Diversify Suppliers and Logistics Providers: To build resilience against disruptions, companies should consider diversifying their supplier base and logistics networks. Relying on a single port or carrier leaves businesses vulnerable to localized disruptions like strikes.

The Bigger Picture: Long-Term Consequences

While immediate actions can help alleviate short-term disruption, the long-term effects of a strike could extend well into 2025. With major global carriers already preparing to impose surcharges on shipments to and from the U.S. East Coast, cost pressures will increase across the board.

“It’s not just about getting containers out of the port—it’s about keeping trade moving in an increasingly fragile supply chain,” says Roeloffs, emphasizing the broader implications of the strike.

Global Logistics, Global Trade Daily, News

Container Trading and Leasing Rates Decline in China ahead of the Golden Week

September 25th, 2024 Container xChange Leave a comment

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.

Chart 1: Average container price chart in China

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.

Chart 3: Average one-way container leasing rates from Shanghai to Los Angeles: July–September 2024

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.

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Implications of Looming Labor Strikes on U.S. Container Trade and Supply Chains

September 18th, 2024 Container xChange Leave a comment

September is traditionally one of the busiest months for U.S. containerized imports, driven by the peak shipping season as businesses prepare for the holiday rush. However, this year presents an unprecedented combination of challenges that could heavily impact supply chains. Potential labor strikes, natural disasters, and tariff uncertainties are converging, creating a highly volatile environment for global trade. This also led to the pulling forward of orders by retailers, which led to strong inventories in the US.

In August 2024, U.S. container cargo imports surged by 12.9% year-over-year, with major ports handling nearly 2.5 million TEUs. While this reflects strong freight demand, it also intensifies concerns as labor strikes loom on October 1st. “The possibility of strikes in US East Coast and Gulf Coast Port adds uncertainty for container shipping professionals doing business in the US,” shared Christian Roeloffs, co-founder and CEO of Container xChange.

For container trading and leasing companies, these disruptions could lead to significant delays and port congestion, impacting equipment turnaround times. “Companies should anticipate short-term spikes in demand for leased containers as retailers rush to secure goods ahead of potential disruptions, particularly for seasonal inventory and industrial shipments,” Roeloffs further added.

“While the threat of strikes looms large, it’s important to note that U.S. inventories are currently strong due to the pulling forward of orders earlier this year to avoid existing disruptions. This stockpile will act as an essential buffer, mitigating the risk of container rates spiking dramatically due to the strikes.

Additionally, with no significant signs of peak season demand strengthening, these strikes might not have as intense an impact as historically seen. However, the overall impact will largely depend on the duration of the strikes, with prolonged disruptions having the potential to intensify the implications for supply chains, leading to more pronounced bottlenecks and greater challenges in container availability. ” Shared Roeloffs.

Potential U.S. Strikes on October 1st

The International Longshoremen’s Association (ILA), representing more than 85,000 dockworkers on the East and Gulf Coasts of the U.S., faces a contract expiration on September 30, 2024. As negotiations with the United States Maritime Alliance Ltd. (USMX) show signs of breaking down, a strike now appears increasingly likely, threatening to disrupt nearly half of the nation’s ocean trade.

Maersk has already warned of severe disruptions, noting that even a brief strike could result in weeks of recovery due to accumulated backlogs. The uncertainty is compounded by the fact that the duration of these strikes is unclear—it could be resolved within weeks or drag on for months, as seen with the West Coast strike last year.

“Leasing rates may rise sharply as importers seek to secure containers amid potential delays. In this environment, traders will need to diversify their partner networks, sourcing strategies, and explore alternative ports to mitigate container shortages,” shared Roeloffs.

A Volatile Market for Container Traders

“September is usually crucial for U.S. containerized imports due to the approaching holiday season. However, this year presents compounded uncertainties,” Roeloffs commented.

Beyond U.S. port strikes, other challenges such as geopolitical instability, Houthi attacks in the Middle East, and the restructuring of global shipping alliances are contributing to market volatility.

Supply Chain Disruptions and Port Congestion

In the event of labor strikes, East and Gulf Coast ports will experience congestion, delaying container turnarounds. Traders could face increased demurrage and detention fees as containers remain stuck at the port. The backlog of cargo could create equipment shortages, raising leasing rates as demand spikes. Some businesses may be forced to reroute shipments through alternative ports, adding logistical complexities and costs.

These uncertainties will fuel market volatility for container trading companies, with unpredictable container prices and availability. Traders may have to adjust their sourcing strategies, while maintaining flexibility to adapt to changing market conditions.

Potential Impact on Customers

Container Trading Companies: Expect fluctuating demand and availability of containers as trade routes realign and U.S. port operations face potential delays. Having alternative strategies for equipment sourcing will prove essential to mitigate bottlenecks.
Container Leasing Companies: The expected surge in demand for container equipment during the peak season could drive leasing rates upward, especially in the event of prolonged labor strikes or storm-related disruptions. Planning for repositioning and anticipating changes in demand across regions will be key to maintaining business continuity.

Preparing for Disruptions

As U.S. container trading and leasing companies navigate these disruptions, we encourage close monitoring of the evolving labor negotiations, weather risks, and global shipping alliance restructuring. We anticipate short-term demand spikes, potential container shortages, and fluctuating leasing rates as the market reacts to these external pressures.

Global Logistics, Global Trade Daily, News, Ocean Ports

Steady Demand for US-bound Shipments keeps Container Prices from Crashing

September 10th, 2024 Container xChange Leave a comment

The global container shipping industry continues to witness an increase in freight demand for US bound shipments as 59% of supply chain professionals surveyed in August 2024 respond in affirmation, while 30% of respondents indicated they have not observed a continued rise in demand, and 11% remain uncertain about the trend. This also explains the continued upward pressure on container prices in US and above average level container leasing rates from China to US.

Figure 1 US freight demand survey conducted in August 2024 by Container xChange

“As we look ahead, the key question remains: How will freight rates and container prices evolve over the next 3 to 6 months? On the one hand, several factors could keep rates elevated or at least stable. Ongoing disruptions in the Red Sea, for example, continue to absorb capacity, with no clear resolution in sight. Additionally, labour disputes at Canadian railroads and U.S. East Coast terminals are causing delays in container turnaround times. This means containers are spending more time in transit, requiring more containers to handle the same amount of freight, which supports higher rates.” Shared Christian Roeloffs, cofounder and CEO of Container xChange.

“Furthermore, we anticipate a soft landing for the U.S. economy, which should sustain healthy demand for containerized imports. If carriers maintain pricing discipline, we could see rates remain strong in the near term.”

“However, there are strong arguments for rates to decline in the coming months. 2024 is on track to become the second-highest year for container deliveries, with manufacturers booked solid through October. The year is shaping up to be one of the strongest years for container production on record. As the same is true for new vessel deliveries, these capacity injections could lead to oversupply despite ongoing disruptions. There’s also uncertainty around the U.S. economy, with pressure on the Fed to cut interest rates at a relatively fast pace due to looming challenges in the labour market. If the economy slows, we may not see the continued demand growth needed to support current freight rates.”

“Moreover, new entrants on trans-Pacific routes, such as TS Line, SeaLead Shipping, and others, are already putting pressure on established carriers by undercutting rates. This could trigger a price war, which may extend to other trade lanes, putting further downward pressure on rates.”

Average container prices continue to grow in the US; majority of respondents from the US expect more price hikes

The container price sentiment for the United States has been transitioning from negative to positive which also shows that the sentiment of supply chain professionals from the US has been improving about near-term container price rise.

Here is the chart showing the xCPSI (Container Price Sentiment Index) in the US from June to August 2024. The chart illustrates the percentage of supply chain professionals who expected container prices to increase during this period, highlighting a consistent upward sentiment.

global trade container price — Figure 2: US xCPSI survey results June-August 2024 by Container xChange

Since May 2024, average container prices have shown a modest yet consistent upward trend, rising from $1468 in June to $1534 in July, and reaching $1582 in August. While the growth has not been dramatic, the steady increase indicates ongoing upward pressure on prices.

Demand for US bound shipments keep one-way container leasing rates from crashing in August

Strong demand for U.S.-bound shipments have helped keep one-way container leasing rates steady towards the end of August. Average one-way container leasing rates dropped by 40.8%, from $1,436 in July to $850 in August. However, when compared to previous months, rates remain above the lows seen in April and May, where they dipped to the below $600 mark.

Despite this weakening, market sentiment remains optimistic, with many expecting price increases.

The global Container Price Sentiment Index (xCPSI) peaked at 83 in May, reflecting strong optimism for rising container prices. However, by mid-August, the index had moderated to around 39. Each week, we survey supply chain professionals on their expectations for future container prices, and from this data, we compute and index the sentiment to generate our Container Price Sentiment Index (xCPSI).”

Figure 5: xCPSI, Container Price Sentiment Index by Container xChange, as on 04 September 2024

Miami-based Andres Valencia, CEO of E-Containers, provides a firsthand perspective on the price stability, growth trends, and the complexities of market fluctuations in the Americas market.

“The ongoing strikes in Canada have introduced complexities in container logistics, particularly in terms of one-way shipments, with certain ports nearing shortages. As some regions see a brief spike in prices due to these disruptions, the overall market remains volatile. Some areas are likely to experience price increases, while others may see a decrease. Looking ahead, we anticipate continued fluctuations in demand across different states, but overall, the market appears resilient as we head into September.”

Another significant improvement in the sentiment has come from UAE where the percentage delta as compared to the global sentiment improved from –8% in June to +18% in August.

On the other hand, the container price sentiment has been shifting from positive to negative in India, indicating that more professionals are now expecting container prices to erode in the coming weeks.

Figure 6: Geographical comparison of container price sentiment to global xCPSI

Market Outlook

Christian Roeloffs, CEO of Container xChange, highlighted the critical role of broader economic factors in shaping the container logistics market.

“The economic outlook remains cautious, with inflation expectations easing slightly but still weighing on consumer sentiment. Retail and wholesale inventories continue to rise, indicating that businesses are still managing excess stock. This could exert downward pressure on prices, particularly if consumer demand weakens in the coming months,” Roeloffs added.

In the U.S., the trade deficit widened sharply in July to $102.7 billion, its highest level in over two years, signaling ongoing challenges in international trade. The imbalance between flat exports and surging imports could pose future pressures on the U.S. economy, especially if inflationary concerns persist alongside strong consumer demand.

In Asia, manufacturing activity shows tentative signs of recovery, particularly in China, South Korea, and Taiwan. China’s Caixin PMI edging above 50 signals slight growth, but the region’s overall economic momentum remains fragile. “The recovery in Asian manufacturing could boost containerized exports from these regions. However, uncertainties around the U.S. election and potential economic cooling may dampen this growth, creating a volatile environment for container logistics,” Roeloffs observed.

The semiconductor sector continues to be a bright spot in Asia, supported by firm global demand. However, other economies, like Malaysia and Indonesia, are still struggling with the ripple effects of China’s prolonged slowdown. “The upcoming U.S. election could further impact consumer sentiment, leading to fluctuations in import demand. For the logistics industry, this means preparing for potential swings in container volumes, which will require more flexible supply chain strategies,” Roeloffs concluded.

North American supply chains are also bracing for significant disruptions due to potential strikes at Canadian railways and U.S. East and Gulf Coast ports. These disruptions, particularly during peak shipping season, threaten to exacerbate existing challenges within the supply chain.

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Strikes at U.S. Ports and Canadian Railways Threaten North American Supply Chains

August 24th, 2024 Container xChange Leave a comment

The looming labor strikes at Canadian railways and U.S. East and Gulf Coast ports are set to cause significant disruptions to North American supply chains. The strikes are expected to create severe operational challenges for the container logistics industry, leading to increased costs for shippers and cargo owners, delays and diversions.

These strikes, which are set to begin if agreements are not reached by August 22, target key areas such as automation and wage increases.

“Given our ongoing forecasts of elevated inventories, we anticipated a potential decline in freight rates in the near term. However, with the looming strikes at Canadian railways and U.S. ports, we may see an immediate uptick in freight rates as market participants brace for significant disruptions. This is a common reaction to potential disruptions, as uncertainty drives up costs.” shared Christian Roeloffs, cofounder and CEO of Container xChange, an online marketplace for container trading and leasing based in Hamburg, Germany.

“In the mid-term, we could face increased volatility in freight rates, with potential spikes driven by supply chain bottlenecks and congestion. Shippers and cargo owners should prepare for higher costs and possible delays as the industry adjusts to these challenges.” added Roeloffs.

As the industry braces for the strikes, companies are already making contingency plans. Hapag-Lloyd, a major player in the container shipping industry, has announced measures to mitigate the impact on their customers. For imports to North America, a diversion fee of $350 per Bill of Lading will apply for containers on water destined for Canadian ports but with inland delivery in the U.S. The company is also advising customers to explore alternative trucking options for deliveries within Canada and has encouraged exporters to consider U.S. Ports of Loading as a precaution. These proactive steps highlight the significant operational disruptions the strikes could cause.

CMA CGM issued a notice detailing several measures, including potential rerouting of vessels to U.S. ports and restrictions on rail shipments. The company has also implemented embargoes on specific intermodal shipments, including hazardous materials and temperature-controlled containers, across their network.

Railways are a critical part of the logistics chain for moving containers from inland locations to ports and vice versa. In Canada, railways handle a substantial portion of container traffic, especially for long-distance transportation across the vast country. For example, the Port of Vancouver, which handles a large share of Canada’s international trade, relies heavily on rail connections. About two-thirds of all cargo volumes at the Port of Vancouver are moved by rail, and this includes containerized goods.

The U.S. ports, particularly those on the East and Gulf Coasts, are bracing for similar challenges. If the strikes materialize, the movement of goods through these ports could be severely impacted, leading to delays and congestion during the peak season when retailers are stocking up for the holidays.

“The possibility of simultaneous strikes at U.S. ports and Canadian railways present a perfect storm for North American trade,” Roeloffs inferred.

Railways and ports are vital to North America’s logistics chain, and any disruption would escalate costs and create significant delays. With two-thirds of all cargo volumes at the Port of Vancouver moved by rail, including 90% of international exports, any work stoppage would cause severe delays, increase costs, and create congestion at terminals. The container logistics sector could face reduced capacity, higher freight rates, and challenges in meeting delivery timelines, affecting everything from daily operations to long-term trade agreements.

The potential rail strike in Canada could have a significant ripple effect on both exports and imports, disrupting trade not only within Canada but also with its key trading partners.

Many of Canada’s key exports, such as grain, potash, coal, and manufactured goods, are transported by rail to ports for shipment overseas. A rail strike would disrupt the flow of these goods, leading to delays in exports and possibly causing congestion at ports as containers pile up. Similarly, imported goods that arrive at Canadian ports often rely on railways to be distributed to various parts of the country. A strike could lead to delays in getting these goods to their final destinations, causing supply chain bottlenecks and increased costs for businesses.

This could lead to increased costs for businesses and consumers, both in Canada and in the trading countries, as goods are delayed or rerouted.

Container xChange urges businesses to stay informed and proactively manage logistics strategies to minimize the impact of these potential disruptions.

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Ningbo Port Resumes Operations After Recent Incident: Container xChange Advises on Managing Impact and Preparing for Future transits

August 14th, 2024 Container xChange Leave a comment

Container xChange, an online container trading and leasing marketplace, is updating the global container trading and leasing community regarding the recent explosion aboard the Yang Ming vessel YM Mobility at Ningbo Port, China.

On August 9, 2024, a container loaded with hazardous materials exploded aboard the YM Mobility while it was berthed at Ningbo Beilun’s Phase III Terminal.

Update on Operations: As of 00:00 on August 12, 2024, Ningbo Beilun’s Phase III Terminal has resumed loading and unloading operations following a 60-hour closure due to the explosion. The terminal has begun gradually resuming normal operations.

Christian Roeloffs, cofounder and CEO of Container xChange emphasized the critical need for preparedness in the face of such disruptions.

“For container trading companies and those involved in container leasing, this incident presents some straightforward challenges worth accounting for. The disruption at the Ningbo Port, combined with pre-existing congestion at major Asian ports, will lead to a deterioration of ocean schedules and further delays in container availability in the coming weeks. Companies must prepare for increased dwell times and a tightening of available container supplies, especially for hazardous and dangerous goods.” shared Roeloffs.

Adrian Degode, Customer Success & Operations Lead, added: “Container xChange’s platform facilitates communication and collaboration between container traders and leasing companies worldwide, helping to coordinate responses and find solutions quickly. Our network can help users secure containers from alternative sources to manage inventory and avoid delays.”

Recommended Actions:

Reroute Shipping Routes: Evaluate and explore alternative shipping routes through less congested ports to avoid delays.

Increase Safety Protocols: Prioritize rigorous inspections and adherence to safety protocols, especially for hazardous goods. (Read our detailed blog post [here].)

Stay Informed: Regular updates from shipping partners and port authorities are crucial for real-time operational adjustments. Maintain open lines of communication to respond promptly to changes.

Plan for Extended Dwell Times: Anticipate longer dwell times at major ports and adjust inventory and delivery schedules accordingly. Consider increasing inventory levels to mitigate disruptions.

Container xChange will continue to provide updates and insights as the situation evolves.

“In light of the recent disruption, Container xChange’s insurance offers essential protection against the risks of total loss, damage, and mysterious disappearance of containers. Our comprehensive coverage includes protection for both total and constructive total loss, general average, and more, ensuring that container traders and leasing companies can mitigate financial impacts and maintain operational stability. Our flexible billing options and claims support are designed to offer peace of mind during these challenging times,” added Degode.

Global Logistics, Global Trade Daily, News, Ocean Ports

Essential Measures for Minimizing Disruption Amid Ningbo Port Closure

August 13th, 2024 Container xChange Leave a comment

Container xChange, an online container trading and leasing marketplace, is alerting the global container trading and leasing community to the serious repercussions of the recent explosion aboard the Yang Ming vessel YM Mobility at Ningbo Port, China. This incident, which has led to the closure of one of the world’s busiest container terminals, is expected to have significant ripple effects across global supply chains, especially on the main trade lanes out of Asia.

On August 9, 2024, a container loaded with hazardous materials exploded aboard the YM Mobility while it was berthed at Ningbo Beilun’s Phase III Terminal. The explosion, which involved organic peroxide materials, has led to the closure of the terminal until further notice.

“With this closure, Ningbo Port is no longer operational, compounding existing supply chain disruptions exacerbated by Typhoon Gaemi in July.” shared Christian Roeloffs, cofounder and CEO of Container xChange.

Christian Roeloffs emphasized the critical need for preparedness in the face of such disruptions. “The closure of Ningbo Port is a stark reminder of the vulnerabilities in global supply chains. Container trading companies and those involved in leasing must act swiftly to mitigate the impact. Proactive measures, such as diversifying sourcing strategies and closely monitoring port operations, will be essential to maintaining business continuity.”

“For container trading companies and those involved in container leasing, this incident presents some straightforward challenges worth accounting for. The disruption at the Ningbo Port, combined with pre-existing congestion at major Asian ports, will lead to a deterioration of ocean schedules and further delays in container availability. Companies must brace for increased dwell times, potential rerouting of shipments, and a tightening of available container supplies, especially for hazardous and dangerous goods.” shared Roeloffs.

Recommended Actions:

Rerouting Shipping Routes: Companies are exploring and evaluating alternative shipping routes through less congested ports to avoid delays. The closure of Ningbo will likely increase congestion at neighboring ports, so proactive planning is crucial.
Increase Safety Protocols: Rigorous inspections and adherence to safety protocols, particularly for hazardous goods, must be prioritized to prevent similar incidents. (Read our detailed blogpost here)
Stay Informed: Regular updates from shipping partners and port authorities will be crucial in adjusting operations in real-time. Companies should maintain open lines of communication to adjust operations in real-time.
Plan for Extended Dwell Times: With delays expected to increase, companies should anticipate longer dwell times at major ports and adjust their inventory and delivery schedules accordingly. Companies should plan for extended delays and consider increasing inventory levels to avoid disruptions.

As the situation unfolds, Container xChange will continue to provide updates and insights to help our customers and partners navigate these challenges. We urge all industry players to stay vigilant and take necessary precautions to minimize disruptions to their operations.

“Container xChange’s platform facilitates communication and collaboration between container traders and leasing companies around the world. This can be valuable for coordinating responses to the Ningbo disruption and to find solutions quickly. With access to a wide network of container traders and leasing companies, container users can find and secure containers easily from alternative sources. This can be crucial for managing inventory and avoiding delays caused by the Ningbo Port closure.” shared Adrian Degode, Customer Success & Operations Lead, Container xChange.

“In light of the recent disruption caused by the Ningbo Port incident, Container xChange’s insurance provides essential protection against the risks of total loss, damage, and mysterious disappearance of containers. Our comprehensive coverage includes protection for both total and constructive total loss, general average, and more, ensuring that container traders and leasing companies can mitigate financial impacts and maintain operational stability. With flexible billing options and support for claims processing, our insurance is designed to offer peace of mind and support during these challenging times.” added Degode.

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Global Logistics, Global Trade Daily, News, United states news

US Container Shipping Braces for Headwinds as Peak Season Approaches

August 7th, 2024 Container xChange Leave a comment

The US container shipping sector is cautiously approaching the peak season, with the upcoming US elections and labor negotiations poised to bring their own set of implications for the container logistics industry, as indicated in the August Container Market Forecaster by Container xChange.

The sector has already been witnessing its own set of challenges like overestimation of demand, pulling forward of orders which caused inflationary trends in the freight and container rates and resultantly, the wait and watch strategy by container sellers and container buyers.

The election year brings an element of uncertainty, as many US container traders are concerned about potential changes in trade and regulatory policies, as well as economic policies that could impact consumer sentiment and their spending patterns.

“While our customers anticipate these headwinds impacting their business, they also remain hopeful that business activity will pick up in September as companies prepare for the holiday season.” shared Angelo Marino, Americas Account manager, Container xChange.

“The upcoming labor negotiations on the US East Coast in Q3 add another layer of potential volatility. Retailers have been preparing for the peak season since early 2024, aiming to avoid stock shortages, and now that we’re entering this busy period, the focus will be on understanding the true demand dynamics. The anticipation of these events is critical for navigating the complexities of the market in the coming crucial months.” shared Christian Roeloffs, cofounder and CEO of Container xChange.

“The hot container leasing market isn’t solely due to the Suez Canal issue; it also ties into expectations surrounding potential changes in US administration and international trade policies. Additionally, retailers are anticipating the peak season and aiming to ensure their stock is secured well before November to avoid any kind of disruptions. While we expect container imports in Europe and the US, along with Asian exports, to remain strong as we approach the peak season, this momentum is likely to cool off by the end of the year. This is because the current stock recovery from retailers will have been largely completed. There is a possibility that the market could stay hot a little longer if retailers decide to stock up ahead of the Chinese New Year, but we don’t anticipate that the current market conditions, influenced in part by the Suez Canal crisis, will persist indefinitely into the future,” shared Andrea Monti, Managing Director and CEO of Sogese SRL, a trading and leasing company based in Italy and a customer of Container xChange.

“Our customers in the US are facing challenges with inventory liquidation due to mismatched expectations between container buyers and container sellers. In this context, it may not be a prosperous time for container traders, the logistics market, or retailers who have stockpiled inventories to avoid delays in the peak season.” added Roeloffs.

Container Price Sentiment Survey Results

A survey of around 1,000 US-based container traders reveals that 78% expect container prices to continue rising in the coming weeks, driven by election uncertainty and potential labor strikes. Only 14% foresee a decline, while 8% expect prices to remain stable. This indicates a broad expectation of continued volatility in the US container trading environment.

However, the global Container Price Sentiment Index (xCPSI) by Container xChange dropped from 63 to 39 points in July, suggesting waning sentiment towards rising container prices in the near term.

Roeloffs added, “The overestimation of strong consumer demand has resulted in overstocked retail inventories. We’ve observed for some time now that actual consumer demand hasn’t experienced a significant spike, thereby allowing retailers and importers ample time to restock before their next cycle. This situation could challenge the container shipping industry, as the recent spike in freight rates and container prices may not be sustainable further in the rest of the year. It’s only a matter of time before we see a downward trend in container and freight rates.”

Market Outlook

“As we approach the peak season of 2024, we’re observing a couple of pivotal shifts expected to impact the container shipping industry. First, there’s a gradual correction in supply and demand on the cards that should stabilize rates in the latter half of the year, owing to a lack of solid demand surge. On a longer term, the more profound change is the ongoing trend toward regionalization and smaller trade networks, which became mainstream in 2021. This shift has gained even more importance today, especially as geopolitical conflicts become a regular consideration in risk resilience strategies. Intra-Asia trade boom is a significant factor that indicates that smaller, more complex trade networks are developing and flourishing.” shared Christian Roeloffs, cofounder and CEO of Container xChange, the online container trading and leasing marketplace, based in Hamburg, Germany.

Global Logistics, Global Trade Daily, News

Will the H1 Boom Continue in H2 of 2024 for the Container Logistics Industry?

July 10th, 2024 Container xChange Leave a comment

Container xChange, the leading digital marketplace for container trading and leasing, has released its mid-year container market forecaster. The analysis delves into container price developments in H1 2024 and offers a market outlook for H2 2024.

“As we move into July, we’re seeing a continued rise in freight rates, container prices, and leasing rates, driven by ongoing geopolitical tensions and resulting supply chain disruptions. The diversions around the Cape of Good Hope and the resulting congestion in major ports have created a perfect storm, causing importers in the US and Europe to pull forward orders in H1 typically reserved for Q3. This has led to a notable supply-demand imbalance. While we might see a peak in July followed by a reduction in freight rates due to easing congestion and reduced demand, the ongoing conflict in the Middle East and potential new disruptions, such as labor strikes, could prolong these challenges. The container shipping industry remains on high alert, adapting to an ever-changing landscape.” Inferred Christian Roeloffs, cofounder and CEO, Container xChange

H1 2024 Container rates Recap

Globally, shipping costs have surged in the first half of 2024, defying the traditional off-season lull

Asia and Middle East and ISC region were the regions that witnessed a significant uptick in container prices since October 2023 due to the Houthi attacks.

On the other hand, container prices remained stable or decreased, reflecting an abundance of containers in traditional import destinations. These prices have now begun to move upwards. Our mid-year forecaster gives a review of global container price developments to offer greater visibility into the trends observed during the first half of the year.

Main destinations that experienced significant container price upticks in H1’2024

Average container prices continue to rise through May and in June. Hong Kong and Vietnam experienced the biggest month on month percentage spike of 35% from May to June for trading containers, followed by China (27%), Russia (24%), Taiwan (23%) and Malaysia (23%).

India also faced a rise in average container prices spiking by 21% from May to June 2024. In Singapore, while there has been a steady rise of 31% in container prices since October 2023, the increase from May to June 2024 was a more moderate 7%.

In terms of the impact of the Houthi attacks, China stood out by a significant leap at 78% container price hike from October’23 to June’24, followed by Hong Kong (77%), Spain (42%), Uzbekistan (40%) and Thailand (35%).

Malysia (29%), Netherlands (29%), Taiwan (28%) and Vietnam followed the pack of biggest price increases since October for container prices. (40 ft high cube, cargo worthy containers)

China and Hong Kong have the highest average container prices currently across the world, namely, $3600 and $3124, respectively.

Region-wise analysis of Impact of Houthi attacks on container price development

To understand the trajectory of container prices development, it becomes important to study the impact that Houthi attacks have had on these. Here is a region-wise impact analysis on the container prices pre-Houthi attacks and until June 2024.

Northeast Asia region witnessed the biggest price increase of 69% since October 2023, with China, Hong Kong and Taiwan registering significant price hikes, indicating robust demand for containers.

Container prices have been on an upward trajectory across Central Asia, the Middle East, the Indian Subcontinent (ISC) region, Japan and Korea and both Northeast and Southeast Asia.

Tony Yu, president, Baiscon Shipping Line Hong Kong Co., Limited with the company headquartered in China and one of our top sellers in the US shared exclusive insights from the ground.

“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.”

Looking into the second half of 2024, Tony expressed optimism tempered by practical challenges.

Discussing significant market drivers and developments for the second half of 2024, Tony emphasized, ” 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”

Building on these insights, Daniel Nee, President of Holyidea Logistics Equipment Manufacture Co., Ltd., (a Container xChange customer based in China) emphasizes the ongoing complexities and unpredictability in the global landscape as pivotal factors which will continue to influence the container industry in the second half of 2024.

“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.”

Container market remains bullish of further price hikes

The first half of 2024 saw the Container Price Sentiment Index (xCPSI) reach an all-time high, and it remains elevated throughout the last six months, indicating a strong sentiment for rising container prices expectations in the upcoming second half of the year.

United States: Container demand spikes, container prices begin to rise

“In recent months, the US container trading market has significantly slowed, primarily due to sharp price increases. Container sellers in the US have held onto stock, anticipating higher prices, while container buyers in US have adopted a cautious stance, awaiting potential price drops. This cautious market behavior has affected our container buyer’s purchasing decisions. There are several factors at play, with a significant impact on the US market, being the impending election and discussions surrounding potential tariffs on Chinese goods. This has spurred heightened demand for shipping containers, driving prices upwards and creating market uncertainty, which in turn has deterred buyers from making immediate purchases. Additionally, the extended route due to the Red Sea situation has exacerbated supply chain disruptions, further influencing market dynamics.” commented Isabella Zomignani, Associate Account Manager, Americas, Container xChange.

Asia continues to grapple with rising container prices and leasing rates in July

Average prices for 40 ft high cube containers (cargo worthy) in China

“In June, we’ve observed a continued rise in container prices in China, impacting both trading and leasing activities. The scarcity of available slots for China-Europe and China-USA routes has intensified, prompting offline suppliers to offer competitive prices to attract customers. This temporary price decrease reflects urgent liquidity needs among suppliers. Moving forward, we anticipate prices to rebound next month as slot availability tightens again.” shared Haoze Lou, broker team, Container xChange.

Market Outlook: H2 2024

The market outlook for the second half of the year is heavily contingent on a revival in consumer demand. Several factors will influence this period, including ongoing geopolitical disruptions and potential labor unrest.

Firstly, we foresee the Houthi attacks to continue and disrupt supply chains with no foreseeable resolution, exacerbating market uncertainties. Additionally, labor unrest in the US east and gulf ports remains a significant potential disruption, with the possibility of flare-ups impacting supply chains further in the latter half of 2024.

However, if the current market conditions persist without major changes, we expect container rates to ease. This reduction in rates could trigger an uptick in container buyer activity, as the buyer side is currently waiting for prices to decline before resuming trading and leasing activities.

Furthermore, according to Alphaliner, the global container fleet grew by 10.6% between June 1, 2023, and June 1, 2024. We anticipate that the introduction of more container fleets into the market will help alleviate some of the price pressures, potentially stabilizing the market and fostering increased trading activity.

Visit Container xChange Market Intelligence Hub for similar analysis and reports.

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What Our Customers Are Saying:

Impact and Cost Implications

President Biden’s Statement:

What’s at Stake?

Immediate Supply Chain Challenges

Strategic Recommendations for Supply Chain participants

Potential U.S. Strikes on October 1st

A Volatile Market for Container Traders

Potential Impact on Customers

Preparing for Disruptions

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