To kick 2021 off, we thought we would share a few updates on the current global shipping container market, as things continue to change very quickly.
Factors at Play
- Freight rates continue to soar, with the Global Container Index moving up by over 30% in the past three weeks. (Source: fbx.freightos.com)
- Update (04/03/2021): Freight rates continue to rise, with the Global Container Index moving up by over 10% in the past 5 weeks. (Source: fbx.freightos.com)
- With Chinese New Year in early February and the subsequent manufacturing shutdown, there are generally a large number of “blank sailings” as shipping lines reduce capacity ahead of the shutdown, however this year there has been very limited reduction in sailings
- Update (04/03/2021): Chinese New Year has come and gone, with almost zero impact on the shipping volumes. Blank sailings reported in previous years at around 20%, were only reflecting at 3% for this year.
- With COVID related lockdowns happening globally to varying extents, the result is a significantly disrupted inland logistics chain, resulting in more containers needed for the same amount of cargo.
- Update (04/03/2021): Disrupted inland logistics chain is still creating an inefficient use of containers, resulting in more containers needed for the same amount of cargo.
The Global Shipping Container Market Price
- Shipping container factories continue to constrain supply into the market by operating reduced production shifts. This has resulted in an order backlog going into June 2021 for some factories and pricing drastically rising over 50% over the last 5 months.
- Update (04/03/2021): There is currently no view on when container factories will open up more than one shift, meaning that production lead times will remain long with sustained higher pricing.
- The used container market has continued to rise too, specifically in China, with all global markets now following suit. Pricing in some ports in China has moved above $4,500 for a USED 40ft HC.
- Update (04/03/2021): Pricing in some ports in China has moved above $5,800 for a USED 40ft HC.
What is causing this?
There are many theories, but it seems the main driver is the shift by the global consumer from service-based spend (travel, tourism, restaurants etc.) to consumer goods, resulting in a spike in demand for shipping services.
How long will it last?
It is very difficult to say, but with the continued 2nd and 3rd waves occurring globally, we see the situation maintaining until well into Q2 of 2021.
Update (04/03/2021): We do see this extending well into Q2 now and potentially even Q3 of 2021.
Immediate impact for us?