Price trends shaped by geopolitical tensions, trade wars, and tariff threats observed in late 2024 are expected to persist into the first quarter of 2025, resulting in higher asset costs for container traders.
"With inflationary pressures persisting and central banks maintaining higher interest rates for longer, container owners will face increased total asset costs. This inevitably pushes breakeven leasing rates higher and raises costs for container users. Sailing through will require sharper strategies to maintain profitability," says Christian Roeloffs, co-founder and CEO of Container xChange. "While global GDP growth is forecasted to remain stable, the risks of overcapacity loom large, especially with strong supply growth in vessels and containers over recent years. If capacity is released, such as through resumed Red Sea passages, overcapacity could escalate quickly. Container owners will need to adopt agile leasing strategies and seek out profitable niche trades. For container users, staying competitive will demand a continual evaluation of the cost differences between SOC and COC operations."
Key takeaways:
- At the start of the year, the U.S. container market is abuzz with speculation that Chinese manufacturers and wholesalers will flood the United States and Canada with used containers. On another note, following steel price raise, there is a general belief that prices will go up considerably.
- However, there’s notable skepticism about the implementation of tariffs promised during Trump’s campaign, which may influence trade flows. It’s worth highlighting that taxation on used containers is generally lower than on new units, a factor that could be shaping the strategic decisions of manufacturers and wholesalers in this space in the coming times.
- Container activity across the APAC region is slowing, with freight forwarders focused on clearing cargos before trucking and port operations wind down for the holidays. Post-New Year, it typically takes manufacturers 1-2 weeks to regain operational momentum, and container leasing rates are expected to remain subdued until mid to late February.
- Container prices have marginally declined for 40-foot cargo worthy containers in China. The average prices for 40-foot-high high cube containers in China have declined by 5% month-on-month on average across locations in December.
- Data indicates that the Transpacific Eastbound trade has recovered substantially after the 2023 dip, with a strong rebound at major West Coast ports in 2024. Port diversification strategies implemented by shippers during the pandemic are still influencing cargo flows, with Houston and NYNJ retaining relevance. Market recovery in 2024 signals improved demand and possibly better supply chain conditions compared to 2023.
- The rebound at Los Angeles and Long Beach in 2024 suggests cargo is returning to traditional West Coast gateways. Consistently growing volumes from 2019 to 2024 at the Port of Houston show the Gulf Coast's increasing role in U.S. trade.
- New orders for manufactured goods fell by $2.1 billion (-0.4%) to $586.1 billion, marking a decline in three of the last four months and signaling potential weakening demand. Shipments saw a modest increase of $0.7 billion (+0.1%) to $586.3 billion, breaking a three-month declining trend, while unfilled orders continued their steady growth, rising by $4.6 billion (+0.3%) to $1,404.8 billion. This pushed the unfilled orders-to-shipments ratio to 7.07, up from 7.04 in October, reflecting robust backlogs and longer lead times. Inventories increased by $2.5 billion (+0.3%) to $859.3 billion following two consecutive monthly declines, with the inventories-to-shipments ratio rising slightly to 1.47 from 1.46.
- In light of the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) reaching a tentative agreement for a new six-year Master Contract,carriers cautioned their customers and added General Rate Increases (GRI) as one of the many initiatives. This anticipation has already led to a significant pull-forward of orders since November 2024. This trend is expected to persist through January, driven by the contract negotiations and their potential impact on supply chain stability; and the Chinese New Year, which falls on Jan. 29, traditionally a period of heightened shipping activity.
- Dallas, Miami, New Orleans and Houston stand out for both year-over-year and month-over-month growth, indicating sustained upward trends.
- The S&P Global US Manufacturing PMI data for December 2024 highlights a challenging end to 2024 for the U.S. manufacturing sector. U.S. manufacturing faced significant headwinds in late 2024, marked by falling orders, rising costs, and supply chain disruptions. While manufacturers are optimistic about improved conditions in 2025, the sector's recovery will depend on domestic and global demand stabilization, inflation control, and the policy direction of the new administration.
- Current market conditions—such as capacity constraints caused by Red Sea diversions and seasonal effects leading up to the Chinese New Year—are supporting elevated freight rates. Much will depend on whether the supply-demand imbalance persists into Q1 and Q2.
- In the near term, the market is likely to remain tight, but stakeholders should be prepared for shifts as seasonal demand tapers and geopolitical or economic developments unfold. Monitoring these indicators will be essential for making informed decisions and capitalizing on emerging trends.
- According to Container xChange’s proprietary Container Price Sentiment Survey (xCPSI), market sentiment regarding future container price increases was significantly more optimistic at the start of 2024 compared to now. As of Jan. 8, the sentiment score stands at 52, a significant decline from 71 during the same week in 2024. This shift in outlook has been consistent throughout the second half of 2024 and into the early months of 2025.
“The drop in sentiment indicates that market participants are less confident about further price hikes in container prices. For container traders, the shift in sentiment could indicate a more cautious approach moving forward, with less pressure to raise prices and potentially more emphasis on optimizing operations or responding to new market conditions,” the study says.
"Geopolitical tensions are intensifying, bringing stricter sanctions and compliance requirements. This adds complexity for container owners and users in selecting partners and ensuring adherence to evolving regulations. Strategic foresight and robust compliance frameworks will be critical to success in 2025,"adds Roeloffs.
