Container Market Forecaster

The month of February 2024 marked a pivotal moment in the trajectory of container leasing and trading rates, which had been on the rise since past three months (starting November 2023), coinciding with the onset of the Red Sea crisis. This inflection point closely aligned with our forecast from the preceding months,  a reduction in average container prices and leasing rates post Chinese New Year.

*Container trading prices for 40 ft High cube containers in China

As the Chinese New Year holiday period concluded and business activities resumed, the rates failed to sustain their upward momentum. Our forecasts predict that the container prices will fall by a measure of 8-16% in the coming two months (March and April 2024) in China going by the cyclic nature of price developments as an impact of the post Chinese New Year demand reduction.  We also foresee potential decline in container prices across the United States, ports of Vancouver and Toronto, and in Europe in the coming two months.*

Table 1: Year-on-year comparison of average container prices*** for 40 ft cargo-worthy containers in China.

Red Sea Update What Lies Ahead? On November 19, Iran-backed Houthi forces began attacking shipping vessels affiliated with Israel passing through the Red Sea. 102 days later, the shipping industry has emerged from this crisis better prepared than many had predicted. As the industry typically responds to such crises, the initial impact was felt on rates. Freight rates immediately and persistently jumped as the world entered the last month of 2023. This timing also coincided with the pre-Lunar New Year rush, which builds up in January and culminates in February. Consequently, the freight rate boom continued well into 2024 as shippers aimed to deliver cargo for the cyclical demand, known as the pre-Chinese New Year rush. Following the conclusion of the Chinese New Year on February 24, 2024, signs of fading demand and falling freight and container rates began to appear. A continued decline in rates is expected, although not crashing. Freight rates typically fall by 30% every year from February to March and into April. Similarly, container rates are expected to fall by a measure of 18-6% depending on locations, with a higher percentage of decline expected in Asia. Over the last 30 days (February 2024), container prices rose by 10% in Northeast Asia, 7% in Oceania, and 2.5% in Southeast Asia, remaining stable in North America. However, prices declined in Europe (5-7%), Japan and Korea (5%), and the Middle East and ISC region (2.4%).

India struggles with container rates volatility 

The Struggle for SOCs (Shipper-owned containers) in China The average prices for 40 ft cargo-worthy containers remained robust in Nhava Sheva and Chennai, where customers are facing container scarcity and tightening capacity due to the impact of the Red Sea crisis. However, we anticipate a 6-8% reduction in these prices in the coming two months (March and April 2024).

Table 2: Year-on-year comparison of average container prices** for 40 ft cargo-worthy containers in India.

Although the rates are currently lower than those in 2022 and even lower than 2023, there has been a slight month-on-month improvement. However, there has been a consistent yearover-year reduction in container prices during the subsequent months of March and April, both globally and in India.

The Struggle for SOCs (Shipper-owned containers) in China

There is a significant disparity between Carrier Owned Container (COC) prices and Shipper Owned Container (SOC) leasing prices. Despite a drop in COC prices, leasing prices for units remain high, leading SOC users to switch back to COC. However, this transition is slow, and market prices are taking time to stabilize. Customers anticipate that SOC leasing prices will eventually balance out, but this process is expected to be gradual. Moreover, there seems to be a discrepancy between the price expectations of SOC users and the offers from suppliers. SOC users expect lower prices, while suppliers are offering higher prices. This mismatch is prolonging the adjustment process, as either suppliers need to lower their prices or users need to increase their target prices for the market to reach equilibrium. This feedback suggests a complex pricing dynamic in the container market in China, with multiple factors influencing price movements and adjustments.