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Depots to Face the Brunt of Container Surplus well into 2023

November 24, 2022
in Trading
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The industry is witnessing a major slump in the order-to-inventory ratio with high inventories but slower demands. According to the November edition of the Container xChange Forecaster, this leaves a rippling effect across different stages of container logistics.

One of the glaring issues which will impact container repositioning and container movement well into the year 2023 is insufficient depot space.

“There is just not enough depot space to accommodate all the containers.  With the further release of container inventory into the market (e.g., from the disposal of leasing fleets), there will be added pressure on depots in the coming months.  This will be a key challenge for some and a competitive advantage for others in the business, especially in China because of the empty container repositioning there”, inferred Christian Roeloffs, cofounder and CEO, of Container xChange, the online container logistics platform. 

Talking about the impact of hinterland disruptions and de-fleeting of shipping lines in the coming times, Andrea Monti, CEO at Sogese who also owns container depots in different locations in Europe commented during the Digital Container Summit in October, “Whatever was coming in and out of, for instance, our Milan depot is quite stuck. And the container volume at the depots is increasing to an extent that we are returning some requests for depot service agreements. We are in a situation where we are not able to accept new clients for some locations.”

This peak season, which has technically not happened this year, retailers and companies are more cautious in their stock management strategy as they adjust to the shorter cargo delivery cycle. 

“There is enough inventory with retailers. Once these inventories exhaust in North America and Europe, companies will order again, and demand for shipping capacity will pop back up. This won’t go back to max pandemic levels but certainly be back to the long-term average upward trend. What has happened now is that the cargo is “on time” again and hence you’ll see a slowdown in new ordering as companies adjust to this more efficient turnaround times in ocean freight delivery.” 

“For container owners, this could potentially mean a rise in container storage fee by depots as more containers pile up to disincentivize longer staying containers at the depots.” said Dr. Johannes Schlingmeier, cofounder and CEO, Container xChange

The latest monthly logistics report by Container xChange ‘Where are all the containers’ echoed interesting testimonies on the market situation. 

The average container prices (for trading) and one-way pickup charges (for leasing) for standard containers declined to their lowest in two years in China. These were at $3711 in October in China, declining further (so far) in November.

CAx (Container availability Index) * values are much higher than pre-pandemic – meaning that the inbound containers are significantly higher at the Chinese ports than the imported boxes this year as compared to 2019 (pre-pandemic) and since then. 

One-way pickup charges for standard containers from China to North America are declining month on month since May 2022 from $1773, to $344 in October. (One-fifth of what it was in May)

depot

One-way pickup charges from China to Europe declined from $2845 in January 2022 to $1726 in May 2022 and further to $910 in October

depot 

One-way pickup charges declined by 80% from $1773 in May to $344 in October over the past 6 months at the China-North America stretch, and a 47% decline on the China-to-Europe stretch

“The declining rates and container prices indicate a weakening demand and surplus of containers. The wider this gap, the lower the container rates and prices. The logistic companies have already moved onto the planning for Chinese New Year because of the weak peak season this year”, further added Roeloffs. 

Average container prices fell by 9% from $3609 in September to $3286 in October in the US

Average prices declining in Europe

 Average prices freefall in Asia 

Rising imbalances in supply and demand for containers, rising empty container repositioning to Asia and tighter depot space will be topics for attention well into the year 2023. 

A majority of those polled by Container xChange in the month of October echo that the freefall of container prices is NOT an indicator of global economic normalization well into 2023. Clearly, the industry is not upbeat about the supply chain getting back on track.

About Container xChange  

Container logistics is plagued by intransparency and mistrust. And contrary to the standardized container itself, most processes in container logistics have not been standardized nor innovated — and are still frustratingly complex, manual and error-prone. Combined with thin margins, this makes it difficult for logistics businesses to survive and thrive. 

Container xChange is the leading online platform for container logistics that brings together all relevant companies to book and manage shipping containers as well as to settle all related invoices and payments. 

The neutral online platform…  

  1. connects supply and demand of shipping containers and transportation services with full transparency on availability, pricing and reputation,  
  2. simplifies operations from pickup to drop-off of containers, 
  3. and auto-settles payments in real-time for all your transactions to reduce invoice reconciliation efforts and payment costs. 

Currently, more than 1500+ vetted container logistics companies trust xChange with their business—and enjoy transparency through performance ratings and partner reviews. Unlike limited personal networks, excel sheets and emails you rely on, Container xChange gives its users countless options to book and manage containers, move faster with confidence, and increase profit margins.

Credit: Source link

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