With the uncertainty that 2020 has brought as a result of COVID-19, we felt it was a good time to reflect and project on what is happening in the shipping container industry globally.
The last six months have been incredibly turbulent for large parts of the global economy, but the logistics industry in which the humble shipping container is still central, has managed to continue steadily through the COVID-19 pandemic, albeit with some peaks and troughs.
The roller coaster of a year was impacted largely by the below:
There has, however, been an unprecedented increase in shipping container prices over the last few weeks in China. Prices have increased as much as 25%, soaring to over $2,500 for a used 40ft HC in some Chinese ports. Not only have prices increased, but the availability has drastically reduced, with month on month reductions in idle stock at the factories dropping by 17%.
This has been driven by the culmination of the above “roller coaster” factors, which are now having an impact, as well as impending USA v China trade war tariffs, which are said to be causing large amounts of “pre-tariff trade”.
Although the price increases are not sustainable and seem to be driven by short term factors as opposed to robust global growth, the shortage is so severe, we do believe that the pricing impact will flow through to the local market in South Africa.
The one factor that could stall this, is the strengthening of the Rand. We have seen this move stronger over the last month, but continued strength is anyone’s guess and so without the assistance of the Rand, we may see container prices on the rise.