The global container shipping industry continues to witness an increase in freight demand for U.S.-bound shipments, according to 59% of supply chain professionals surveyed by Container xChange. Meanwhile 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 the United States and above average level container leasing rates from China to the United States.
“As we look ahead, the key question remains: How will freight rates and container prices evolve over the next 3-6 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,” says Christian Roeloffs, co-founder 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,” adds Roeloffs. “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.”
Key takeaways:
- Average container prices continue to grow in the United States; majority of respondents from the United States expect more price hikes.
- Since May, average container prices have shown a modest yet consistent upward trend, rising from $1,468 in June to $1,534 in July, and reaching $1,582 in August. While the growth has not been dramatic, the steady increase indicates ongoing upward pressure on prices.
- Demand for U.S.-bound shipments keep one-way container leasing rates from crashing in 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.
“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 adds. "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."
