Shipping lines and container owners in North America, mostly in the U.S., are finding it difficult to return cargo containers to China.
To add to the challenges, the U.S. is also facing major trucking issues that are making cargo movement within the country difficult, according to the monthly container logistic report published Friday by Container xChange, a technology marketplace and operating platform for container logistic companies.
“What is happening in the U.S, is that there is already congestion, like every year, because it is the peak shipping season, and everyone is trying to make sure that retailers have enough inventory on the shelves for the upcoming holiday and Christmas season,” Christian Roeloffs, co-founder and CEO of Container xChange, said. “The U.S. West coast labor negotiations, due to which many freight forwarders rerouted the cargo to the U.S. East Coast, have now caused congestion on the U.S. East Coast, too. Hinterland complications like acute shortage of truckers and rail delays are adding to the woes. All in all, there are many challenges that will impact a smooth container movement into the peak season.”
Roeloffs said these empty containers piling up at the depots in the U.S. and containers stuck on the sea owing to the congestion will contribute to a capacity crunch. On the supply side, he pointed to an excess of containers, with recessionary fears and inflation dampening consumer demand.
“Nonetheless, we are sliding into the peak season and this is the busiest season of the year,” Roeloffs said. “The average container prices traditionally increase in China and Southeast Asia during the peak shipping season and we do expect to see a rise in the prices in the coming weeks. In the mid-term, what could possibly change this year is the relatively smaller degree of increase in average container prices owing to several disruptions.”
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According to the report, the average container prices in the region rose to $2,214 in August from $2,116 in July. The ports on the U.S. East Coast and West Coast are experiencing an increase in average container prices, while averages are tumbling in Asia.
In North America, the U.S. saw a 7.3 percent increase in per month trading prices for cargo containers compared to the previous month. Canada, on the other hand, saw a 15.28 percent decline.
While container prices might see an uptick, freight rates have eased for the time being. Drewry’s composite World Container Index (WCI) was down 5 percent to $5,378.68 per 40-foot container or equivalent unit (FEU) for the week ended Sept. 8—the 28th consecutive weekly decrease—and fell 47 percent compared with the same week last year.
The latest Drewry WCI composite index was 48 percent below the peak of $10,377 reached a year ago, but it was still 46 percent higher than the five-year average of $3,679.
Freight rates on the busy Shanghai to Los Angeles route dropped 14 percent to $4,782 per FEU, while rates on Shanghai-New York dipped 4 percent to $8,957 per FEU. Spot rates on Rotterdam-Shanghai fell 9 percent to $1,082 per FEU, and rates from Shanghai to Rotterdam and Rotterdam to New York each decreased 2 percent to $7,435 and $6,688 per FEU, respectively.
Rates on Shanghai-Genoa fell 1 percent to $7,884 per FEU, as rates on Los Angeles-Shanghai and New York-Rotterdam hovered around the previous week’s level. Drewry expects the index to decrease in the next few weeks.
While globally the supply chain disruptions were slowly easing up, there’s no telling with shipping troubles might end, the report said.
“The lockdowns in China will further make the situation difficult for shippers and freight forwarders to move the cargo from China to the U.S.,” Roeloffs added.