A YTD analysis of global container leasing transactions by Container xChange shows a notable uptick in average rates since the beginning of 2024, indicating an uptick in demand for container leasing services and an increased financial burden on lessors, pointing to a potentially tighter market. The study also highlights persistently strong container trade patterns between China and Russia, Taiwan and India, and China and India, amongst other hot trade routes so far in this year 2024.
“China to North America one-way container leasing rates have increased particularly in 2024, with the rise mostly driven by a widening container price delta between China and the US (China becoming “more expensive” up until March vs. US container prices stagnating or decreasing),” commented Christian Roeloffs, cofounder and CEO of Container xChange, an online container trading and leasing platform.
China to Canada leasing rates rise by 64% in March
There has been a significant spike in the China to Canada ports from February to March. Yantian to Toronto rates surged by 68% from February to March. These were US$730 in February which peaked at US$1230 in March. The Qingdao to Vancouver leasing rates surged by 64% in one month. Ningbo to Toronto rates surged by 35%, Shenzhen to Toronto rates surged by 26%, and Tianjin to Toronto rates surged by 23%.
China to US rates also surge significantly
The most significant surge was witnessed on the Ningbo to Oakland routes where rates surged by 92% in one month (from February to March 2024), where the leasing rates were US$1020 in February and reached US$1963 in March this year. Container leasing rates from Shanghai to Los Angeles saw a significant increase in Q1 of 2024 compared to 2023 (see chart below).
This uptick can be attributed to significant geopolitical disruptions, primarily the Israel-Hamas war that began in November and continued through the first quarter of 2024, which have kept leasing rates on this route elevated. The average leasing rates from Shanghai to Los Angeles for 40 ft high cube containers increased by 67% from an average of US$703 in Q4 2023 (Oct-Dec) to US$1173 in Q1 2024 (Jan-Mar).
The overall view from key ports in China to key ports in the US also shows the same
trend (image below)
“Fluctuations in both demand and supply lead to significant volatility in container logistics. Currently, we see a widening gap between demand and supply, with demand subdued and supply high due to a whiplash effect from orders during the 2020/2021 period. This leads to (over)supply effectively absorbing disruption shocks and keeping container prices subdued, even as operational costs continue to rise,” shared Roeloffs.
“One-way leasing rates, on the other hand, are mainly driven by (a) increasing
financing costs and (b) differences in container prices between origin and
destination. This leads to e.g., China-US leasing rates to increase on the back of a
widening container price delta.” Roeloffs further added.
China’s container trading prices surge in 2024
Container trading prices in China started to recover as we entered the year 2024. In
April 2024, prices in most regions are higher compared to April 2023, indicating an overall increase in prices over the year. Dalian, Ningbo, Qingdao, Shanghai, and Xiamen particularly increased significantly. (see chart below)
The rise in prices is due to two foreseeable market forces – cyclical uptake in demand in Q1 and the heightened geopolitical pressures that propel container trading activity in China.
China-to-Russia trade stays strong
“We continue to see significant container movement Ex China to Russia. Average container prices in Russia remain weak, as low as US$811 for a 40 ft cargo-worthy container as of 11 April 2024, which was upwards of US$4000 during the peak season until Feb’22. This rate is the lowest in 2024 so far that container traders have witnessed in Russia. This is because of the added complexities of repatriating boxes out of Russia,” stated a Container xChange official.
Average container prices continue to decline in North America so far in 2024
figures are in US dollars)
An analysis of the average monthly container prices over the past three years reveals a consistent y-o-y downward trend, with 2024 recording the lowest average container prices across the major US ports. This marks the third consecutive year of declining monthly average container prices at these ports.
Market Outlook
We see an improved outlook for leasing on the China-US route and a consistently strong trade between China –Russia.
The container logistics market is poised for stabilization, and we do not see market volatility causing the container prices to spike significantly yet. This is also because of the high overcapacity overhang that still exists in the market and acts as a shock absorber for the container market. On the other hand, the container leasing market stays strong.
This article was written by Christian Roeloffs, cofounder and CEO of Container xChange.
