Supply Chain Professionals Embrace Tech, Anticipate Positive Growth, and Strategize for Overcapacity Challenges

Global Logistics, Global Trade Daily, Technology

Supply Chain Professionals Embrace Tech, Anticipate Positive Growth, and Strategize for Overcapacity Challenges

December 24th, 2023 Container xChange Leave a comment

Container xChange, the world’s leading online container logistics platform, recently conducted a comprehensive survey with 1200 supply chain professionals globally.

The collective results reveal an optimistic outlook for 2024, as respondents foresee positive growth in the global container shipping industry in 2024 as compared to 2023. 74% of respondents expressing optimism about the industry’s growth, 20% expecting stability, and only 6% anticipating a decline. Most participants anticipate an increase in container prices compared to 2023 levels.

“As we navigate the evolving landscape of the global container shipping industry, the positive shift in sentiment revealed by our annual survey is a promising indicator for 2024. Supply chain professionals are strategically rethinking trade routes and embracing technology to foster resilience and innovation. While we are optimistic about the industry’s growth, we remain vigilant, recognizing potential disruptions in 2024, such as geopolitical tensions. explained Christian Roeloffs, cofounder and CEO of Container xChange.

Another indication of improving market sentiment witnessed as part of the annual survey is that 53% of respondents expect container prices to increase in the coming year as compared to the year 2023, while 26% expect these prices to remain stable at these rates, and only 21% pessimistic about the prices to decline further.

Chart 1: Survey with 1200 supply chain professionals about how they expect container prices to develop in the year 2024

The Container Price Sentiment Index (xCPSI) which is an industry sentiment barometer from Container xChange, mirrors this positive sentiment as it has been showing consistently higher values in the H2 of this year (starting July) as compared to the H1, showcasing an improving sentiment for container prices in the second half of the year 2023.

Particularly in the Q4’23, the sentiment has been consistently higher as compared to the rest of the three quarters in 2023.

Chart 2: Container xChange Container Price Sentiment Index (xCPSI), sentiment consistently improves significantly in the H2’23

These findings were released as the company published results of its annual xChange industry speak survey 2023-24. The survey was released to 1200 container logistics players globally including shipping lines, container traders, freight forwarding companies, NVOCCs, shippers and procurement companies. The objective of the survey was to study the industry sentiment, key learnings from the year 2023 and outlook for the year 2024 from the players.

Majority of respondents said that they are planning to invest in technology for forecasting and planning (30%) followed by real time visibility and tracking (24%), collaboration and connectivity (27%) and lastly, process automation (18%).

Chart 3: Container xChange Year-end survey 2023-24 – Key Supply Chain Tech Investments in 2024

“Our survey underscores a significant emphasis on technology adoption among supply chain professionals, with forecasting and planning as top of mind for our customers. The industry’s recognition of the pivotal role played by real-time visibility, collaboration, and process automation reflects a collective commitment to efficiency and strategic planning.” said Roeloffs.

When asked where they plan to prioritize the technology investments in 2024, the share of each amongst the four were distributed almost evenly, while forecasting and planning remaining top of mind for these professionals who responded.

When asked about how the oversupply of containers would be managed in 2024, most respondents believe that exploring to new markets and trade routes will be a key strategy used by carriers to tackle the overcapacity conundrum in 2024. Other popular tactics will be scrapping old vessels and slow steaming strategies.

Chart 4: Container xChange Year-end survey 2023-24 – How will the carriers tackle the oversupply in the market in 2024

Global Logistics, Global Trade Daily, News

54% Container Logistics Pros do not Believe Shifting Container Production Away from China will Ease Supply Chain Woes

November 26th, 2023 Container xChange Leave a comment

The global shipping industry is currently grappling with a complex challenge that revolves around a crucial element – shipping containers. The real issue at hand is not the geographical concentration of container production but rather the efficient positioning of the global container pool.

According to Container xChange’s recent survey, 54% of container logistics professionals did not believe that shifting container production away from China would improve the supply chain.

Container xChange surveyed around 1500 supply chain professionals to gauge container logistics and supply chain professionals’ sentiment around shifting container production away from China. The survey also delved into concerns about potential cost implications stemming from shifting container production. A significant 51% of respondents anticipated that such a transition could result in increased costs in the shipping industry, indicating a strong concern about the financial aspect of the change.

“In the global trade landscape, it’s not where containers are produced that matters but rather where they are repositioned at the right place and the right time. This challenge is further exacerbated by factors such as supply chain disruptions, labor strikes, COVID-19, and the unforgettable incident in the Suez Canal.” Added Christian Roeloffs, cofounder and CEO, Container xChange, an online global container logistics platform.

Recent years have seen a notable shift in container production, with countries like Vietnam and India aspiring to reduce reliance on China, the giant in container manufacturing.

The Challenge of Container Repositioning

A surplus of containers has become a growing concern. The container industry experienced a 13% boost in capacity in 2021 due to various supply chain issues, increasing transit times. However, the shorter transit times that followed and fluctuating demand left the industry with an excess of 13 million containers globally in the spring of 2023. To make things more complicated, this surplus has led to a drop in container rates, and there’s a cost attached to it – about $0.5 to $1 per TEU per day for regular containers, and potentially more for specialized containers like reefers and chemical tanks.

What’s even more telling is that data from Drewry shows that the production of 20-foot equivalent units (TEUs) plummeted by a staggering 71% from 1.06 million to 306,000 between the first quarter of 2022 and the same period in the following year. The push to diversify container production away from China doesn’t provide a clear picture of how much capacity will shift away from the Chinese giant.

“There was a significant discussion about container scarcity during the pandemic, but it had nothing to do with any geopolitical underlying reasons. The only reason, in my view, would be geopolitical risk management — i.e., you want to hedge yourself against a black swan event where trade relationships with China are sanctioned or the like.

The numbers don’t lie. While diversifying container production away from China might seem like a great idea, we need to tread carefully. The surplus of containers and the complexities of repositioning containers raise concerns about the effectiveness of this strategy in addressing global supply chain challenges.”, said Christian Roeloffs, Co-Founder and CEO, Container xChange.

China’s Iron Grip as Container Pool Surge to Unprecedented Levels

In recent years, there has been a significant shift in container production, with countries like Vietnam and India seeking to reduce their reliance on China, the dominant player in container manufacturing. To better understand this landscape, let’s delve into the numbers. In 2021, China produced a staggering 7.1 million twenty-foot equivalent units (TEUs), a substantial increase from the average annual production in the previous decade, which stood at just 2.6 million TEUs. This places China at the forefront of container production, contributing to more than 95% of the world’s containers.

China’s advantage doesn’t stop at scale; they have a bustling export market, ensuring immediate utilization of their containers. In contrast, containers produced outside China often face skepticism due to quality concerns and higher costs. For instance, an Indian container can cost around Rs 1.46 lakh per box, while a Chinese container is considerably cheaper, at just Rs 75,000 each.

New Contenders

Vietnam has emerged as a strong contender in this shift, with the capacity to manufacture a significant chunk of the world’s steel boxes. India is also stepping up to the plate, looking to diversify the container production landscape. But there’s a catch.

Containers produced outside China often face scepticism due to concerns about their quality. These non-Chinese containers may also come with a higher price tag, primarily because they can’t leverage China’s massive scale to keep costs down. When we look at the cost, it’s quite a difference. An Indian container can cost around Rs 1.46 lakh per box, while a Chinese one is a lot cheaper, at just Rs 75,000 each.

Moreover, the immediate demand for containers in China, driven by a significant export volume, adds to its appeal. New build containers in China, especially when produced in large quantities, offer more attractive economies of scale compared to Vietnam and India. The industry’s skepticism about how this transition will unfold is grounded in these considerations.

While India and Vietnam do present certain advantages, such as the ability to produce smaller batches and customize containers, the extent to which production will shift to India and China remains uncertain.

In addition, China’s unique advantage, immediate domestic demand, is not something others can replicate. This means that containers produced in places like Vietnam and India may not find as many immediate takers.

While the idea of diversifying production sources is intriguing, it’s important to recognize the challenges involved.

The changing dynamics of container production are a crucial development in the shipping industry. The desire to reduce dependence on China is understandable, but it’s essential to weigh the pros and cons carefully. The industry must navigate the tricky waters of an oversupplied market and the intricacies of container repositioning.

The current market is flooded with an abundance of shipping containers, well-equipped to meet the short-term surge in demand. This presents a unique opportunity to address persistent issues that have plagued the shipping industry for years.

Now is the time to rectify problems such as the inefficiencies in repositioning containers, ensuring the quality and reliability of containers produced outside dominant markets, and the implementation of robust, localized supply chain strategies.

In the long run, as demand rebounds, countries must ensure their supply chain strategies are effective, localized, and responsive to the demand hotspots, rather than focusing solely on container production. Finding a balanced and sustainable path forward is essential for the future of global trade and logistics.

Global Logistics, Global Trade Daily, News, Ocean Ports, Uncategorized

Container xChange Unveils ‘The Future of Shipping in 2024’ Report

November 22nd, 2023 Container xChange Leave a comment

Container xChange, a leading authority in the shipping industry, released its second annual “2023 Shipping Industry Trends and Future of Shipping in 2024” report. The report gives an analysis of the key impacts that shaped the container shipping industry in 2023 and provides predictions and scenarios for 2024 with an aim to equip the industry to plan ahead in time for a ‘grumpy’ 2024.

Overall, the report indicates high probability of market recovery failure in 2024. The industry surveys conducted with the supply chain professionals globally indicates that in 2024, the shipping industry is predicted to grapple with persistently reduced demand and oversupply, potentially leading to fiercer competition, further reduced profits, and possible market consolidation. Although container schedule reliability is improving, persistent challenges remain. Blank sailings are expected to rise in response to market volatility, while imbalanced container availability, driven by economic crises, may continue in certain regions.

Planning considerations for container logistics players in 2024 –

1. In the wake of longer-term factors such as inflation, increased interest rates, and a shift in consumer spending patterns from goods to services, cautious consumer spending in 2023 is expected to extend into 2024. This caution is anticipated to impact the demand for imported manufactured products, with implications for the container market. According to PYMNTS research findings, 74% of consumers have reduced nonessential retail spending, influencing the container market for an extended period. Container prices took center stage in 2023, causing concern among stakeholders, and a further decline in demand is expected as the Chinese New Year approaches.

Josilene Mattos, Senior Global Account Manager at Hapag-Lloyd AG, anticipates a stable demand for 2024 and a more balanced market supply, primarily driven by evolving environmental regulations. “Importers in the USA have diversified their sources to include Southeast Asia, India, and Pakistan. This strategic move has proven to be a successful business practice and should be sustained in the years to come. Relying solely on a single source is not advisable, as it allows for the growth of other countries in the production of various products.” said Josilene.

2. Oversupply Risks and Increased Deliveries:

The shipping industry faces the risk of oversupply in 2024 as deliveries are set to increase to 2.95 million TEUs. The surge in deliveries, including “Megamaxes” and “Neopanamaxes,” may lead to intense competition, reduced profits, and potential mergers and acquisitions. Carriers, particularly in North America, are navigating a delicate balance between government-driven demand and rising interest rates. Overordering of ships during the economic boom could create overcapacity, turning 2023’s profits into 2024’s losses. The sector is projected to face challenges to restore supply and demand equilibrium until 2026.

Timothy Renshaw, a shipping industry analyst, highlights the overcapacity issue and the potential disruption of reliable container ship scheduling in 2024. “The North American shipping sector in 2023 is navigating a precarious balance between government-driven demand from programs like the Infrastructure Investment and Jobs Act and rising interest rates aimed at curbing inflation. This has left consumers squeezed, potentially depleting their savings by early 2024, jeopardizing freight demand as capacity increases. Global ocean container companies ordering new ships during the pandemic’s economic boom have created an overcapacity issue that may turn 2023’s profits into 2024’s losses and disrupt reliable container ship scheduling. It’s projected that supply and demand equilibrium won’t be restored until 2026, posing challenges for the industry’s profitability in both the short and long term” said Timothy Renshaw, a British Columbia-based shipping industry analyst and journalist.

3. Geopolitical Uncertainties and Shifts in Trade Routes:

Geopolitical uncertainties in 2023, including conflicts in Ukraine, Taiwan, and Israel, significantly impacted the shipping industry. These effects are expected to persist in 2024, with potential consequences for trade routes. The Russia-Ukraine conflict led to the closure of Black Sea ports, causing congestion and delays in goods transportation. Potential conflicts in the Taiwan Strait and the Israel-Palestine region pose risks to key shipping routes, impacting trading in 2024 and beyond.

The expansion of BRICS countries introduces new dynamics, diversifying trade routes and introducing alternative payment systems. Energy cooperation and resource competition may reshape shipping dynamics, offering both opportunities and challenges for the shipping sector.

4. China Plus One Diversification:

Various factors, including ongoing trade tensions between the United States and China, rising labor costs, and concerns about potential future manufacturing disruptions, are driving companies to diversify away from China. While completely disengaging from China is challenging due to extensive electronic supply chains, companies are making strategic moves to relocate final manufacturing and assembly processes outside of China.

Christian Roeloffs, CEO of Container xChange, notes the expected increase in trade between China and Southeast Asia, India, and other similar destinations. The “China Plus One” strategy is anticipated to show more prominent trends and signs `ZAZ~ZAQS in 2024, with companies seeking additional containers to diversify their supply chains.

Impact and Potential Scenarios in 2024:

1. Reduced Demand and Oversupply Intensify Competition:

The break of alliances, such as Maersk and MSC’s decision not to renew their 2M alliance, marks a significant shift in the industry. The resulting less demand and oversupply may lead to heightened competitive pressures and lower profits. The industry could witness fierce competition for market share among carriers, potentially necessitating further rounds of mergers and acquisitions.

Vladimir Tagasov, Head of Analytics at FESCO, highlights the unique factors setting Russia’s container-shipping market apart from the rest of the world.

2. Container Line Schedule Reliability on the Rise:

Container line schedule reliability is improving, returning to pre-pandemic levels. Although global schedule reliability declined slightly in August 2023, the industry is on a positive trajectory. MSC emerges as the most reliable top-14 carrier in August 2023, followed by Maersk and Hamburg Süd. Despite improvements, challenges persist, and the industry is focused on achieving further enhancements.

Josilene Mattos, Senior Global Account Manager at Hapag-Lloyd AG, emphasizes the influence of evolving environmental regulations on schedule reliability.

3. Blank Sailings to Increase in 2024:

Blank sailings fluctuated in 2023 but are expected to increase in 2024 due to market volatility. Despite being more organized than in the previous year, blank sailings remain a strategy to stabilize market rates and manage demand patterns. Significant fluctuations in blank sailings across major shipping routes reflect the dynamic global shipping industry influenced by factors such as market conditions and disruptions.

Christian Roeloffs, CEO of Container xChange, highlights the challenges posed by the imbalanced container trade and shipping service reliability.

4. Container Availability to Remain Imbalanced:

Economic challenges in the Euro Zone contribute to imbalanced container trade, affecting container availability. The Container Availability Index indicates higher container burdens in ports like Rotterdam. As the Euro Zone grapples with an ongoing economic crisis, the region struggles with the challenge of surplus containers causing repositioning costs exceeding the asset cost.

“In 2023, the Russian container-shipping market differs notably from global trends. It’s characterized by a growing focus on autonomy, an expanding linear service network with new ports and routes, continued state support for exporters, local market imbalances, and high freight rates. These factors combine to set Russia’s container-shipping market apart from the rest of the world” said Vladimir Tagasov, Head of Analytics, FESCO.

intermodal cargo shipping container import logistics chain port containers

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Pressure on Box Owners in Europe to Reposition Containers to other Regions as Depots Flood with Empties

November 9th, 2023 Container xChange Leave a comment

As the Euro Zone grapples with an ongoing economic crisis, facing declining trade and subsequently, a drop in container trade, the region struggles with the challenge of surplus containers causing repositioning costs exceeding the asset cost. Industry predicts that the container lessors are more focused on long term strategies so that the cost of repositioning may result extremely diluted over the asset lifetime.

Exactly one year prior, in November 2022, Container xChange reported the persistently deepening problem of an excess of containers burdening depots across Europe. Fast forward to today, and the situation has continued to escalate.

“We have a poisonous mix of severely imbalanced container trade with high level of excess inventory in Europe, and at the same time unreliable shipping services, suddenly lacking the vessel capacity to reposition empties out which in turn makes the situation even more difficult” commented Christian Roeloffs, cofounder and CEO, Container xChange an online container logistics platform based in Hamburg, Germany.

COVID aftermath in 2019, and later Russia’s war in Ukraine in 2022, left a permanent impact on EU’s trade with its major trading partners like China, the US, and UK. Subsequently, the imports and exports, both declined.

Retail trade volumes and economic sentiment, both further declined for the Euro Area in 2023. While the final household consumption further declined, the household savings grew from 14.5% in Q1 to 14.9% in Q2 2023.

With consumers retracting their expenditures persistently, and trade declining, this of course leaves its due impact on the shipping business in Europe.

Ports in Europe experience consistent month on month low import and export volume TEUs.

In the first nine months of 2023, there was 6% less throughput in the port of Rotterdam: 329.9 million tonnes compared to 351.0 million tonnes in the same period in 2022. The decline was mainly related to the throughput of containers and coal. The container segment saw a decline of 8.1% in weight and 7.2% in the number of containers (TEU, twenty feet equivalent unit) in the first nine months.

The import and export comparison are similar at the port of Antwerp and that of Hamburg. The biggest struggle for container owners in Europe is the persistent problem of excess containers leading to overflowing depots. The container owners are looking for solutions to repatriate containers back to China and to Russia.

The excess of inbound containers this October is also evident in the Container availability Index (CAx) which measures the inbound and outbound containers at any given port. For Rotterdam, the values are at an all-time high at 0.70 this October as compared to 0.59 in October 2022. This indicates that the burden of containers is significantly higher in Rotterdam. According to Drewry, In August 2023, the European Container Port Throughput Index saw a 0.4% MoM decline, reaching 100.2 points, down 2.8% dover the August 2022 level.

“Container owners are grappling with the issue of repositioning empty containers to Asia, and this task has become financially burdensome as repositioning costs now surpass the asset costs. However, the caveats here is that this could be an issue for operators looking for short term results, for instance, the traders. On the other hand, container lessors are more focused on long term strategies so that the cost of repositioning may result extremely diluted over the asset lifetime.” Commented Andrea Monti, Italian container depot owner Sogese chief executive Andrea Monti.

While the carriers are looking to reduce capacity in this region, on the other hand we see the persistent blank sailings trend. In the next five weeks, 9% of 660 scheduled sailings on major East-West routes are cancelled. Most of these cancellations (52%) are on the Asia-North Europe and Mediterranean routes, with 35% on Transpacific Eastbound, and 13% on Transatlantic Westbound routes.

“We do hear from our customers that depots are burdened, and the box owners are looking to move their containers to other regions. There is also a rush to reposition containers out of Russia and the prices there are quite low. With recessionary fears on the horizon in Europe, and specifically in Germany, the outlook for 2024 is shaky. But one thing is certain – 2024 will be better than 2023 for the container shipping industry.” Shared Christian Reoloffs, cofounder and CEO of Container xChange.

The biggest uncertainty is the geopolitical risks that have been destructive for the supply chain industry.

“The Israel – Palestine conflict have remained a regionally destructive humanitarian crisis and have not yet impacted the European Union’s trade and economy. Nevertheless, it is essential to recognize that the container market is highly sensitive to broader economic and geopolitical shifts, as these can substantially influence global trade. The ongoing conflict in Israel holds the potential to affect consumer confidence, manufacturing operations in the region, and ultimately trade volumes emanating from that area.” Roeloffs added.

Amidst this, there are positive signs for container trade witnessed on the Container xChange platform. Russia is a very popular container trading and leasing market.

“Hot stretches include 40 ft high cubes from Ex Russia to China and Intra Russia. The container prices are more stable now in Euro area and in China which brings cheer for box trading players as more stable prices gives way to plan the moves better.” Jakob Hafner, Business Unit Leasing & Trading, Germany, Container xChange.

An overview of the container prices across key ports in Europe

Average prices for 40 ft high cube cargo worthy containers down by 44% this year in October 2023 from October 2022 across key ports in Europe, lowest in four years since 2020.

Time Series	Antwerp	Hamburg	Rotterdam
October 2020	1740$	1690$	1726$
October 2021	4132$	4062$	4108$
October 2022	2091$	2216$	2111$
October 2023	1005$	1283$	1248$

Source: Container xChange marketplace platform

Similar trend is observed for 20 ft DC, cargo worthy containers. However the decline is steeper for 40 ft HC containers, as compared to 20 ft DCs across ports in Europe.

Time series	Hamburg	Antwerp	Rotterdam
October 2020	1075$	900$	913$
October 2021	2546$	2484$	2388$
October 2022	1584$	1612$	1418$
October 2023	1140$	945$	615$

Source: Container xChange marketplace platform

Container xChange periodically deep dives into the container trading and leasing market trends to help equip its customers and industry drive better container business decision making. This analysis evaluates company and market information to contextualize solid understanding of the macro economic factors and draws correlation into how these are impacting the container market in the region.

Global Logistics, Global Trade Daily, Ocean Ports

Container Market Sentiment Signals Rebound: A ‘Shipper’s Market’ this Peak Season

August 22nd, 2023 Container xChange Leave a comment

Container xChange, an online container logistics platform, published its August Container Market Forecaster today. Despite the ongoing market fluctuations, the Container Price Sentiment Index (xCPSI) has exhibited resilience and witnessed growth in July as compared to the month of June. The forecaster also noted that container prices have been relatively stable over the past 30 days (July) as compared to the previous 90 days (May-July).

The Container Price Sentiment Index (xCPSI) conducts market surveys concurrently and distils industry experts’ collective insights about container price trends into a quantitative measure, providing insight into near-future expectations for the container market dynamics. In July, 2,570 supply chain professionals participated in the survey.

While the opinion is varied, still most respondents (42%) foresee an increase in container prices in the near-term which is indicative of potential market improvement, 28% foresee a further decline in container prices, suggesting a certain degree of pessimism in market conditions. 30% of those surveyed maintained that prices would remain unchanged.

This growth in sentiment underscores the industry’s anticipation of an imminent turnaround, contributing a sense of positivity to the landscape.

Container Industry Stabilizing Amidst Market Fluctuations

Average container prices have been relatively stable in the last 30 days as compared to the price volatility over the past 90 days (30 days – July, 90 days – May-July).

Analyzing a 30-day price delta comparison across key regions, the market has witnessed average price fluctuations ranging from -4% to +5.20% in the month of July 2023. However, the container prices have experienced a visible dip over a 90-day period, with Southeast Asia reporting a substantial -15.73% decline from May to July 2023.

Despite this sustained dip, the sentiment index has stayed strong, even growing in July. The alignment of sentiment and pricing trends suggests an industry outlook that foresees a turning point, shifting away from skepticism towards a shared anticipation of market recovery despite ongoing price adjustments.

Asian ports have been witnessing steady changes in average container prices for 40 HC cargo-worthy containers. For shippers, engaging in container trading or leasing within Southeast Asia at present, compared to three months prior or even just one month ago, presents a viable business prospect.

These average prices for 20 ft cargo worthy containers (region-wise) as of 9th August 2023 is illustrated in the graph below.

Region-wise average prices for 20 ft cargo worthy containers

Carrier Capacity Management Spur Intra-Asia Trade Surge

According to Fitch Ratings, in the second quarter of 2023, China witnessed a 6% year on year increase in total container throughput, a significant improvement compared to 3% growth in first quarter of 2023. This expansion was primarily propelled by intensification of trade under the Regional Comprehensive Economic Partnership (RCEP), introduction of new foreign trade routes at the Dalian port, and upward trajectory of trade with nations participating in the Belt and Road Initiative.

A surge in demand for containers on Intra Asia trade lanes was observed on the platform, for example, the China to India stretch was popular in the month of July on Container xChange.

Here are the top five stretches for both the 40 HC and 20 DC containers Ex China on xChange Insights as on 10th August 2023 –

40 ft HC	20 ft DC
China to India	China to United States
China to Russian Federation	China to India
China to China	China to Russian Federation
China to United Arab Emirates	China to Canada
China to Belarus	China to United Arab Emirates

Leasing charges for 40 ft HC containers on stretches Ex-China are amongst the top 10 stretches on xChange Insights indicating a bounce back from low leasing pick up charges over the last months.

Leasing charges for 40 HC containers on prominent trade stretches

Indications from Drewry point towards Asia’s entry into a peak season, resulting in a notable 42% surge in the Shanghai-Los Angeles spot rate over a four-week period concluding on August 3rd. Simultaneously, the Drewry Shanghai-Rotterdam index also saw a 20% upswing within the same duration.

Due to increased trade between India and the wider Asian region, ocean carriers are adding more capacity on the Intra-Asia trade route. This is also propelled by the sourcing diversification strategy in South Asia, particularly in countries like Vietnam and India. The aim is to increase shipment volumes and improve market presence. These changes in strategy allow these companies to optimise their operations and potentially strengthen their market position. This is important in a dynamic and competitive shipping industry.

United States: A potential Industry Rebound

The Global Ports Tracker forecasts, provided by NRF (National Retail Federation), indicate that import cargo volumes are poised to reach their peak in August 2023. This surge aligns with retailers’ preparations for the winter holiday season stocking.

Real GDP increased at an annual rate of 2.4% for the April-through-June period, after rising 2% in the first quarter this year, surpassing expectations and delaying concerns of a recession.

The S&P Global Flash US Manufacturing PMI posted 49.0 in July, up from 46.3 in June indicates market improvement. A decrease of 0.5% in wholesale inventories also indicates that the inventories are becoming leaner in the US.

“As economists shift from predicting recession to a ‘soft landing’, the industry holds its momentum. While some experts remain cautious, the foundation of a resilient economy, sustained consumer activity, and strategic federal investments improves the outlook of the upcoming holiday season.” shared Christian Roeloffs, cofounder and CEO, Container xChange.

“It’s a shipper’s market this peak season as rates stabilize at below pre-COVID levels and capacity is abundant. Prices are low and this offers a great opportunity for exporters this peak season.” Roeloffs added.

Eurozone Emerges from Technical Recession: A Turning Tide

In the second quarter of 2023, seasonally adjusted GDP increased by 0.3% in the euro area and was stable in the EU, compared with the previous quarter, according to a preliminary flash estimate published by Eurostat, the statistical office of the European Union. In the first quarter of 2023, GDP had remained stable in the euro area and had increased by 0.2% in the EU. Therefore, avoiding a technical recession in Eurozone.

“Although we did avoid a technical recession in the Eurozone, retail trade is down by 0.3%, along with high inflation rate. These high prices will continue to exert pressure on operating costs for shipping companies. Carriers and freight forwarders should anticipate rising expenses related to provisioning ships and providing for crew members. Shippers might also experience increased costs for transporting goods, affecting overall supply chain costs.” Commented Roeloffs.

“Short-term shipping demand may experience a boost, especially for routes connected to countries with stronger growth rates like Ireland and Spain. However, the potential for growth to be less robust than expected warrants cautious optimism. Prepare for potential shifts in shipping demand as companies explore more cost-efficient transport options during uncertain economic periods.” Added Roeloffs.

The shipping industry’s course for the next few months is intricately woven with economic shifts, trade dynamics, and supply chain adaptations. As we approach the holiday season, the industry’s resilience and adaptability will be put to the test.

Global Logistics, Global Trade Daily, News

Container xChange Update on Impact of Severe Flooding and Typhoon Threat in China

August 4th, 2023 Container xChange Leave a comment

Container xChange is closely monitoring the severe flooding caused by torrential rains and the remnants of Typhoon Doksuri in China. As the situation unfolds, we are tracking the potential impact on infrastructure, including ports, roads, railways, and other critical areas, to provide support and assistance to our valued customers in the shipping supply chain.

China has been grappling with torrential rains and severe flooding in several regions, including Beijing, for multiple days. The ongoing natural disaster has resulted in casualties, mass evacuations, and extensive damage to infrastructure, raising concerns about its potential impact on the shipping industry.

China’s National Meteorological Center (NMC) on Tuesday also issued a yellow alert for strong winds, as Typhoon Khanun approaches east China. Authorities have issued a reminder for all ships and personnel navigating and operating in sea areas affected by the strong winds, urging them to promptly return to ports for safety. Relevant departments have been called upon to strengthen port facilities and ensure foolproof preparations to tackle extreme weather conditions. (According to China’s official Xinhua News Agency)

Three railway trains were left stranded due to complete transportation cut-off in some places caused by severe flooding around the Beijing districts of Fangshan and Mentougou on Monday.

Railway services between southern and eastern Taiwan were halted as the flooding could damage road and rail networks, making it challenging to smoothly move goods to and from the ports. This could result in delays in inland transportation and create difficulties in cargo storage.

Doksuri made landfall on Friday, downing power lines and uprooting trees, affecting around 880,000 people in coastal Fujian with more than 354,400 people evacuated and resettled, and causing over 478 million yuan ($67 million) in direct economic losses, state media reported.

Twelve districts in Beijing will continue to remain on red alert for flooding on Tuesday as rainstorms are expected to persist across Fangshan, Mentougou, Yanqing and Changping districts.

The heavy rainfall and flooding may lead to labor shortages and reduced productivity, impacting cargo handling, customs clearance, and overall supply chain operations.

The incident may potentially affect trade routes in the region, with shipping lines considering rerouting vessels to avoid affected areas. This could lead to adjustments in shipping schedules and transit times.

Customers are urged to stay informed through reliable sources and plan their logistics operations accordingly. For any urgent queries or assistance, Container xChange’s customer support team is available to provide guidance.

“We understand the gravity of this natural disaster and its potential impact on the shipping supply chain,” said Christian Roeloffs, cofounder and CEO at Container xChange. “Our priority is to support our customers and ensure continuity in their shipping operations.”

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93% of Logistics Professionals Spend Half their day Fixing Problems without Digital Tools

May 3rd, 2023 Container xChange Leave a comment

Container xChange, an online container logistics platform, has published its recent research report ‘The benefits of digitalizing container operations’. The report is based on a market survey of more than 1000 logistics professionals and revealed that without digital tools, freight forwarders spend almost half of their working days fixing problems.

Addressing Inefficiencies: The State of Digitalization in Container Operations

A staggering 93% of logistics professionals are spending nearly half of their working day solely dedicated to addressing problems. This indicates a significant inefficiency in the current system, leading to a waste of valuable time and resources.

Logistics professionals face a multitude of challenges when procuring a container deal, which can cause delays and lead to lost revenue. Among the most common problems are incorrect or incomplete documentation, and miscommunication and misunderstandings in international deals.

Other challenges include payment delays, discrepancies in container quality or quantity, undetected damage, and unexpected events such as weather-related disruptions or port strikes. These issues can cause significant disruptions to container operations and ultimately harm businesses.

Furthermore, 92% of logistics professionals are spending an average of 3-4 hours to source just one new partner when needed. This highlights the challenges faced by freight forwarders to maintain a diverse and reliable network of partners, leading to increased time and effort required for partnership acquisition.

In addition to spending almost half of their working day fixing problems and 3-4 hours sourcing one new partner when needed, 53% of logistics professionals spend 3-4 hours within the week discussing terms and conditions with new partners.

Furthermore, the report shows that 93% of logistics professionals spend 2-4 hours contacting depots for release and drop off references. These manual processes are time-consuming and can lead to inefficiencies in the container shipping industry.

The report has also revealed that one-third of logistics professionals are spending a significant amount of time on manual transactions, with an average of 10 minutes per transaction, highlighting the need for digital adoption for even the simplest operations in the container operations industry.

Commenting on the state of digitalization of the maritime, supply chain, and logistics industry, Nikolaus Sievers, Director of Logistics Optimisation Solutions at Solvo.ai said, “Supply chains consist of tangible and intangible flows: on one hand you have physical cargo flows and humans handling documents, and on the other, you have digital flows of data. The business of international freight forwarding is all about the intersection of people, processes and technology.”

Digitalization Becoming Essential for Logistics Industry, Risk of Falling Behind for Non-Adopters

The move to digital is evident, and those who don’t make the switch are at risk of falling behind. With the increasing demand for speed, accuracy and transparency in the industry, the use of digital tools is becoming essential.

Adding to this, the report shows that those who have digitalized or automated similar processes investigated in the report already have a significant advantage.

By automating just these three processes i.e. Online marketplace for equipment and partner sourcing, Container tracking, release references of live ETAs, and Online chat for negotiating terms and conditions, one could save 8+ hours per week or 4 full working days per month.

logistics

For example, most players spend only 5-10 minutes sourcing a partner using an online marketplace, effectively saving 170 minutes to their un-digital counterparts, per partner.

“Digitalization is the inevitable evolution for every industry, and the container logistics industry is no different,” said Christian Roeloffs, CEO of Container xChange. “In today’s difficult times, companies are struggling with innumerable macroeconomic and geopolitical disruptions. With these manual processes, it can become even more difficult to do business. Our research shows that the move to digital tools can save time, increase efficiency and improve profitability. Logistics professionals need to embrace digital transformation to stay ahead in a competitive market.”

“As the report has shown, time saved from digitalizing operations at work is proving to be an asset for freight forwarders. It allows them to focus on higher-level tasks that can drive growth and success for the company, like setting long-term goals and identifying new markets for expansion. Additionally, this free time can foster a more collaborative and innovative culture within the organization, leading to new products, services, and business models.”, he added.

Container xChange is leading the way in digitalizing container operations, providing a platform that connects shippers, freight forwarders and leasing companies worldwide. By using Container xChange’s platform, logistics professionals can source new, trusted partners, digitize container logistics processes, and streamline their operations.

For more information, please visit the Container xChange website at www.container-xchange.com.

To download the report, visit: The Benefits of digitalizing container operations

To listen to the webinar discussing the report, visit: Time Is Money: Save both by digitalizing these container operations

Aim and Methodology

The research aimed to identify operational processes that can be easily digitalized and provide a quantified return on investment in time, money, or effort. The focus was on container logistics from the viewpoint of a freight forwarder.

The researchers grouped touchpoints along the container journey into phases and spotlighted one phase that exhibited the most quantified value. The study surveyed 1000+ logistics professionals, including clients and website traffic, through LinkedIn polls, Typeform surveys, and personal interviews over email or Zoom.

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Archives, Uncategorized

Shippers Brace for Market Bounce

March 31st, 2023 MDS Transmodal Leave a comment

Containerized cargo volumes moved in the deep-sea container shipping market fell a further 2.5% during the final quarter of 2022, marking the traditionally busiest period of the year as the ‘peak season without a peak’.

Volumes have fallen steadily in the early weeks of 2023 and world trade continues to stumble as economies grapple with persistent inflation and high energy prices, suppressing consumer demand for goods across nearly all economic sectors.

Commenting on the publication of the latest GSF/MDS Transmodal Container Shipping Market Review, James Hookham, Secretary General of Global Shippers Forum said:

“This has stopped being just a supply chain or a shipping issue and shippers and carriers are firmly in the hands of global economic forces which are themselves responding to structural weaknesses in economies and to geopolitical tensions”.

“Predicting volumes and inventory requirements for the remainder of the year is a leap into the unknown for many shippers, as few but the most experienced will have encountered so varied a mix of influencing factors”.

With interest rates still high and Central Banks hinting they could go higher still, the inflationary effects of the Covid crisis and the crunch on consumer spending is lingering into the second quarter this year.

On the demand side, many carriers and service providers are anticipating a recovery in demand in the second half of the year, but this is more in hope than expectation – there are few economic signals to support such optimism.

The arrival of new shipping capacity, an apparent questioning of the benefits of shipping alliances and an inevitable reduction in utilization of vessel space, is also changing the shape of the supply side of the equation in container shipping.

Shippers have undoubtedly benefitted from the dramatic fall in spot rates over the past nine months, with costs on many routes back to pre-Covid levels. But weak demand for their core products will be of more concern to shippers than the cost of their shipment. Whilst wary of the speed at which demand could recover – as seen in 2020 – many shippers are bracing for a bounce in rates that may not arrive for some time.

Shippers have also been enjoying have seen a sharp improvement in port call predictability with the number of scheduled calls actually made by vessels significantly improved over Q3 2022. This is the first time since in the reviews started in 2020 that the Service Quality Indicators have all been positive, albeit from a low base.

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Archives, Global Logistics, Global Trade Daily, News

Bearish Container Shipping Demand Hits Container Prices and Leasing Rates across Europe

March 27th, 2023 Container xChange Leave a comment

Excess containers stranded across Europe are causing congestion bottlenecks and space shortages at ports, warehouses, and storage yards, according to the March edition of the Europe Container Market Forecaster, published by Container xChange.

The online logistics company estimates that container overcapacity currently amounts to between three and five million TEUs (Twenty-foot Equivalent Unit). As well as causing storage shortages, the excess of containers is now putting substantial downward pressure on box prices and leasing rates across the continent.

“The critical Asia-Europe container shipping lane has seen demand tail off rapidly since the summer of 2022 which has been reflected in sharp falls in container shipping spot freight rates,” said Christian Roeloffs, CEO & Co-Founder, Container xChange.

“This is prompting carriers to cut services or cascade capacity on to regional trades. The problem is that this is leaving empties stranded across Europe instead of being sent back to Asia and other origin markets to be loaded with more exports.

“When export demand picks up once more, this huge pile-up of boxes will gradually be whittled down with most returning to Asia. But strike action during March at the port of Hamburg in Germany and at various container terminals in France will slow that process. The strikes are generally bad for schedule reliability.”

Ports swamped by empties

Excess containers are evident at key European hub ports monitored by Container xChange’s Container Availability Index (CAx). Readings at the ports of Hamburg, Rotterdam, and Antwerp were all above 0.8 in March. This means that a major excess of containers has built up: an index of 0.5 describes a balanced market, below 0.5 represents a shortage of containers, and above 0.5 represents excess containers.

Container xChange is also seeing a relentless drop in container prices and leasing rates on its European marketplace due to excess supply. For example, average container prices for 40 ft high cube, brand new containers have been consistently falling in recent months across Europe. During week 11 (13-19 March 2023) prices dropped to $2832 per unit in Hamburg, to $3050 in Rotterdam, and to $2739 in Antwerp (see graph A below).

Graph A: Container prices Chart_40 ft HC_Brand New

Average container prices in Europe are now considerably lower than in either China or the US (see graph B Below)

Graph B: 6 months view of average container prices_40 ft HC_brand new_Europe, China, and the US

Moreover, average leasing rates from Ningbo to Rotterdam for a 40 ft High Cube container have dropped from $528 in week 9 (27 February – 9 March 2023) to $446 in week 11, a drop of 15% in two weeks (see graph C).

Graph C: Average leasing rates from Ningbo to Rotterdam_40 ft High Cube

One of Container xChange’s marketplace customers reported: “Liners are now increasingly selling off second hand units into the market at prices below what the leasing companies are requesting in their resale divisions. Most of the second-hand equipment should now be the liner equipment. This is also a sign that depot congestion is now a real issue and liners are aware of this and have started to sell off inventory.”

Economic headwinds

Global oversupply of boxes and low demand for cargo due to economic headwinds are the main drivers of the current excess of boxes across Europe. According to Eurostat, in seasonally adjusted terms the Eurozone’s trade deficit on goods fell from -€13.4bn for December 2022 to -€11.4 in January 2023. Imports dropped by 1.8% to €252.9bn, a fifth consecutive monthly fall.

More positively, the February S&P Global Eurozone Composite PMI (Purchasing Managers’ Index) reported that the Eurozone economy expanded at its strongest pace since June 2022. Business confidence also rose to a 12-month high but remained below the level prior to Russia’s invasion of Ukraine.

The positives were offset by euro area manufacturers again recording a drop in demand for their goods, although production volumes broadly stabilized in February, ending an eight-month sequence of contracting output.

Banking crisis dark clouds

However, European consumer and industry sentiment has been further knocked in March by the banking sector crisis which has resulted in major stock market losses.

“Despite the banking sector’s troubles most evident in the plights of Silicon Valley Bank, Signature Bank and Credit Suisse, such is the concern of central banks with inflation that we still saw the US Federal Reserve push up interest rates by a quarter-point on 22 March,” said Roeloffs.

“What is clear from that decision is that central banks face tough calls over interest rates in the current economic environment, which creates uncertainty for investors who understandably are taking a ‘wait and see’ approach. Less investment, especially in capital goods, means less demand for transportation and lower GDP growth.

“If central banks continue to increase rates, this will put further pressure on lower quality borrowers. And we know that there are quite a few such borrowers in the transportation and logistics industry.

“So, a lot of companies will have trouble financing themselves in an environment where already revenues are under pressure through decreased rates. Their costs are increasing through inflation which means higher OpEx and margins under more pressure. And if they now face financing issues, this could lead to serious issues across global supply chains.”

To get complete visibility into container data and analysis, subscribe to our data tool ‘Insights’ here – http://bit.ly/3TysMrT

Archives, Global Logistics, Global Trade Daily, Ocean Ports, Uncategorized

February Decrease Keeps 2023 U.S. Container Imports on 2019 Path

March 13th, 2023 Chris Jones, EVP of industry and services at Descartes Leave a comment

Descartes Systems Group, the global leader in uniting logistics-intensive businesses in commerce, released its March Global Shipping Report for logistics and supply chain professionals. The report shows February 2023 U.S. container imports decreased significantly from January 2023 but remained aligned with pre-pandemic 2019 volumes. Despite the reduction, port transit delays increased for the top West, East and Gulf Coast ports. Chinese imports followed the downward trend along with the rest of the top countries of origin. COVID continues to be a factor from ports of origin and the West Coast labor situation has still not been sorted out. The February update of the logistics metrics Descartes is tracking shows some consistency with pre-pandemic import volume seasonality but continues to point to challenging global supply chain performance in 2023.

February 2023 U.S. container import volumes decreased 16.2% from January 2023 to 1,734,272 TEUs (see Figure 1). Versus February 2022, TEU volume was down 25.0%, but only 0.3% lower than pre-pandemic February 2019. Two points to consider with the February numbers: 1) February has 28 days versus 31 for January and 2) With the Chinese Lunar New Year holiday occurring in January 2023, its impact on container import volumes would be seen in late February and early March 2023.

Figure 1. U.S. Container Import Volume Year-over-Year Comparison

Source: Descartes Datamyne™

“Examining imports from January and February in the previous six years, February 2023 volumes would have been expected to be significantly lower than January 2023 (see Figure 2),” said Chris Jones, EVP Industry at Descartes. “Declining container import volumes but rising port transit times demonstrate that, while 2023 volumes resemble 2019, global supply chain performance could remain uneven in 2023.”

Figure 2: January to February U.S. Container Import Volume Comparison

Source: Descartes Datamyne™

The March report is Descartes’ twentieth installment since beginning its analysis in August 2021. To read past reports, learn more about the key economic and logistics factors driving the global shipping crisis, and review strategies to help address it in the near-, short- and long-term, visit Descartes’ Global Shipping Resource Center.

About Descartes

Descartes (Nasdaq:DSGX) (TSX:DSG) is the global leader in providing on-demand, software-as-a-service solutions focused on improving the productivity, performance and security of logistics-intensive businesses. Customers use our modular, software-as-a-service solutions to route, schedule, track and measure delivery resources; plan, allocate and execute shipments; rate, audit and pay transportation invoices; access global trade data; file customs and security documents for imports and exports; and complete numerous other logistics processes by participating in the world’s largest, collaborative multimodal logistics community. Our headquarters are in Waterloo, Ontario, Canada and we have offices and partners around the world. Learn more at www.descartes.com, and connect with us on LinkedIn and Twitter.

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