Asian container availability is tightening, and purchase and rental costs are soaring, according to a key metric tracking that data, as container lines warn that equipment will become even scarcer in the eastbound trans-Pacific as demand builds through May.
That heavy demand for containerized shipping, and the difficulties of handling such large volumes, means the current equipment imbalance can be expected to deteriorate, predicted Johannes Schlingmeier, CEO and founder of Container xChange, an online platform for the leasing and trading of shipping containers
“The relentless pace of container shipping trade since the summer of 2020 is not easing and this is reflected in equipment shortages in Asia, and elsewhere,” he said in a statement Monday. “We expect markets will tighten even further in the coming weeks as the ripple effect of the Suez Canal closure further disrupts container shipping services and equipment availability.”
That sentiment was shared by container line executives, who told JOC.com last week that shippers could expect equipment shortages to intensify over the next few weeks across Chinese ports amid unrelenting demand on the trans-Pacific.
“Equipment remains tied up on ships waiting outside ports and from extended dwell and transit times on the land side,” Hapag-Lloyd CEO Rolf Habben Jansen told JOC.com. He expects the availability of containers in Asia to be tight for another six to eight weeks.
“The week starting April 19 through to the beginning of May will see the largest impact when empty containers coming back to Asia are delayed, and import returns are lower,” said James Wroe, head of Asia Pacific liner operations center at Maersk.
During the 13-month period from Aug. 1, 2020, through Aug. 31, 2021, US imports are projected to be at or above 2 million TEU in 11 of the 13 months, according to Global Port Tracker, which is published monthly by the National Retail Federation and Hackett Associates. Before last year, monthly US imports from Asia had only hit the 2 million TEU mark once, in October 2018.
At the major US gateway of Los Angeles-Long Beach, imports from Asia in March totaled 795,012 TEU, up 15.9 percent from February, and up 92.7 percent compared to March 2020, according to PIERS, a JOC.com sister company within IHS Markit. March marked the ninth consecutive month that Los Angeles-Long Beach handled about 800,000 TEU of Asian imports. By comparison, the gateway never handled 800,000 TEU of Asian imports in a single month in 2019.
Chinese exports were up 30.6 percent in March year over year, which was actually a slowdown from the 60.6 percent increase recorded during the first two months of the year, China customs data shows.
Import wave overwhelms terminals
The US import volume has overwhelmed terminals, and with vessels being delayed for sometimes weeks outside LA-Long Beach, carriers are posting record-low schedule reliability levels. On-time performance of carriers in February fell to just 11 percent compared to 57.6 percent during the same month in 2020, Sea-Intelligence Maritime Analysis reported.
Another equipment shortage metric is the cost of the boxes. Average prices for used 20-foot containers in China increased 94 percent between November 2020 and March 2021, according to the latest data from Container xChange. From an average price of $1,299 per TEU in November last year, by March the cost per box was $2,521.
The urgent demand for boxes in the current highly stressed ocean container market was pushing the prices for used containers beyond what was once considered a “normal” price for a newbuild box, said Schlingmeier.
“It always depends on the exact equipment type, but before shortages became critical, a standard, used container that was a few years old would cost around $1,000 in China, while a brand-new container would be about double the price,” he said.
“However, in the current market, used containers are selling at $2,300–2,600 across China, while prices for brand-new containers at Shanghai, for example, have skyrocketed by 64 percent in 2021 to an average of $3,390,” Schlingmeier added.
Maersk said in a recent customer advisory that equipment shortages remained an industry-wide challenge in Asia, and that the imbalance would be most significant from this week until the beginning of May as empty containers coming back to Asia were delayed and import returns lower.
“During those two weeks, we will see a tight equipment situation across a wider range of China ports, as well as Busan in Korea,” Maersk noted, adding that from May 3, the shortage would start to ease and empty container supply would return to normal by May 10. The carrier said there were not enough 40-foot high cube containers in Asia to cover demand forecasts, with Shanghai and Ningbo facing the greatest impact.