China’s container trade and leasing rates to fall in the future

This month’s China market update is filled with developments that threaten to disrupt supply chains within China and from China to key markets such as the United States and Europe.

See also: China’s container trade and leasing markets send mixed signals

Typhoon causes delays in berthing times and container operations at major Chinese ports

Last week, China was hit by its worst typhoon in 75 years, which made landfall on its eastern coast.

Hapag-Lloyd reports that vessel calls at Shanghai are currently delayed by 36 to 60 hours, while calls at Ningbo are delayed by 24 to 48 hours. This bottleneck is expected to intensify further as Typhoon Prasang approaches, potentially exacerbating an already tense situation.

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

East Coast labor strike affects U.S.-bound goods

On the US side, the ongoing threat of strikes at East Coast ports has created uncertainty. These strikes are expected to affect operations at East Coast ports. This has led to an acceleration in orders over the past two or three months, with companies rushing to bring forward shipments to mitigate potential delays.

“Given recent strong growth in the U.S. economy, especially consumer spending (expected to grow 2.4% in 2024), businesses have been shipping goods forward to mitigate potential delays. This consumer demand, combined with a projected 3.8% increase in imports in 2024, represents the importance of timely shipments from China.” Christian Roeloffs, Co-founder and CEO Container xChangean online global container trading and leasing marketplace headquartered in Hamburg, Germany.

Golden Week is approaching; another slowing factor

Our regular surveys show that Chinese demand for U.S. goods remains strong, especially with the upcoming Golden Week, which begins on October 1 and traditionally causes a temporary slowdown in logistics activity across China, with a noticeable decline lasting seven to ten days.

Due to factors such as the US labor strike, the upcoming Golden Week and the suspension of port operations, there will be turbulence and uncertainty in the China-US shipping route in the next 20 days.

China’s container market situation: weak demand and container prices

Despite these uncertainties, there has been no significant congestion or market tightening in China. Some customers have reported lower container prices and lower COC (Carrier Owned Container) rates, suggesting that demand for Chinese exports is weakening.

Average container prices are on a downward trend

Average container prices in China have been on a downward trend through September 2024, with the pace of decline accelerating ahead of the Golden Week holiday. This decline reflects a general reduction in demand for container shipping.

Prices fell 25% year-on-year, from $3,012 in September 2023 to $2,525 in September 2024. Container prices peaked at $2,603 ​​in July 2024 this year and have fallen for two consecutive months since then.

Rental prices fall for second consecutive month

Overall, the average one-way container charter rate from China to the United States fell 35% from $1,221 in the first week of August 2024 to $787 on September 23, 2024.

Average one-way container charter prices from Shanghai to Los Angeles fell for the second consecutive month. Rates fell from $1,149 in July to $786 in August and to $732 as of mid-September. Despite this decline, current rates remain high compared to $479 in the same period in 2023. Due to the uncertainty surrounding the US East Coast strike and the broader economic environment, we expect these rates to remain relatively high for the remainder of the year.

Industry Insights and Market Outlook

The challenge facing the Chinese market at the moment is the low rates for carrier-owned containers (COCs), which makes it more difficult to ship goods to the US. This, combined with high pick-up charges (PUCs), has led to a decrease in the number of shipper-owned containers (SOCs) arriving in the US. As a result, we may see higher prices for goods shipped to the US.

Container leasing demand is expected to slow as Golden Week approaches. Most of the inventory for Christmas and Black Friday has already been shipped, and delivery usually takes 30 to 60 days. Despite the ongoing challenges, there are no reports of major port congestion in China, although general trade volumes are declining, indicating a more difficult economic environment. Currently, the security of containers is not a major issue, but this may change as market conditions develop.