Just a month after container prices had fallen so far that a rapid revival seemed like a long-shot, rates appear to be rising once again with prices seeming to stabilize, too.
Container XChange‘s Container Price Sentiment Index (xCPSI) showed growth in July versus the trough seen in June. The online container logistics platform also noted that container prices have been relatively stable through July compared to the two months prior.
Analyzing a 30-day price delta comparison across key ocean shipping regions, Container XChange observed average price fluctuations ranging from a 4 percent dip to a 5.2 percent gain last month.
Related Stories
“It’s a shipper’s market this peak season as rates stabilize at below pre-Covid levels and capacity is abundant. Prices are low and this offers a great opportunity for exporters this peak season,” said Christian Roeloffs co-founder and CEO, Container XChange, in a statement.
Container XChange created the xCPSI as a sentiment analysis tool that surveys supply chain professionals on their short-term price expectations. The index distills their collective insights about container price trends into a quantitative measure, providing insight into near-future expectations for container market dynamics.
This index peaked at 12 in June and remained in the single digits throughout the month, before falling to 1 in the first week of July. But since then, the metric has not fallen below 15 and went as high as 21.
“The alignment of sentiment and pricing trends suggests an industry outlook that foresees a turning point, shifting away from skepticism towards a shared anticipation of market recovery despite ongoing price adjustments,” said Container XChange in its August Container Market Forecaster.
Another major spot rate indicator also suggests rate resilience through July and August. On Aug. 10, Drewry’s composite World Container Index (WCI) increased by 1.7 percent week over week to $1,790.60 per 40-foot container—the fifth-straight consecutive week of sequential growth. This is the highest spot rate average since March 16, when the composite was $1,790.36.
On a yearly basis, WCI spot rates are down 72.2 percent against the same week last year. The composite calculates container freight rates on eight major routes to and from the U.S., Europe and Asia.
Ocean and air freight rate analytics software Xeneta said Wednesday in a blog post that container spot rates compiled on its platform have risen above longer-term contract rates—a reversal that could put shippers that shift between the U.S. and China in a tougher position, as many who have been taking advantage of a weaker short-term market and delaying signing new long-term contracts will have to keep a closer eye on weekly developments.
The spot rate increases are partly driven by some demand recovery compared to 2019 pre-Covid levels, according to analysis from Judah Levine, head of research, Freightos. But the higher prices could be temporary depending on what happens with container demand.
“Even as peak season gets underway, carriers are having to reduce capacity in order to get rates to climb, reflecting the generally over-supplied state of the market as fleet sizes continue to grow,” Levine said.
While rates seem to be stabilizing, supply chain execs still don’t have a consensus on where they expect prices to end up.
Last month, 42 percent of the 2,570 supply chain professionals polled for Container XChange’s market survey said they see container prices rising in the near term while 28 percent foresee a decline. The other 30 percent don’t see prices changing.
Even if prices continue to go up, there hasn’t been much indication that volume will rise in tandem. In its second quarter earnings report, container shipping giant Maersk gave a grim outlook for cargo volumes, projecting a 1 percent to 4 percent contraction this year, versus a previous forecast of a 0.5 percent gain to a more modest 2.5 percent decline. CEO Vincent Clerc described “a really subdued environment that will continue for the rest of this year.”
Stefan Paul, CEO of freight forwarding giant Kuehne + Nagel, doesn’t expect a peak season this year, citing “no signals either on air or sea,” according to an earnings call last month.
