Container xChange sees warehoses overflowing and possible rebound in box rates in March

HAMBURG - Container xChange, an online platform for container logistics, has released its container market forecast for March.

While most industry participants anticipate a rebound in container prices in the coming months, Container xChange reportedthattheContainerPrice

“We learn from many customers of Container xChange that the demand for containers is still there, just that the supply is overshooting the demand. Due to this, we see ripple impacts like forexample, depotsworking onmaxcapacity (Depots inChinafor instance working on 90% utilization) and therefore, not being able to accept new clients. This is a global phenomenon now. And that is a struggle for the NVOCCs and shipping lines who want to open new markets,” commented Christian Roeloffs, co-founder and CEOofContainerxChange.

According to the analysis, oversupply of containers has led depots in countries such as China to operate at nearly 90% capacity, making it difficult for depots to move boxes and, as a result,makingdepotslesseffective.

That means that depots make money from handling (gate moves) rather than storage and as a result, this growth is also more painful for them in terms of contributing to operational inefficiencies ratherthanrevenue,notedthereport.

“But the production was, is and will be still working, as old, heavily used containers must be replaced. We must wait it out till the end of the Q1 of 2023 to see how this situation isdeveloping because ofsomanydisruptions in our industry,” pointed out Agnieszka Polejewska, container depot department coordinator of Langowski Logistics, a companybasedinPoland.

Container xChange also discovered that rental businesses and shipping lines are keeping their containers for longer than usual, deciding a wait-and-see approach in thehopethatvalueswillstabilise.

The rental and transportation firms have a free storage arrangement with the depots, so sell-offs are also not taking place, according to Container xChange, and as a result, they aren’t bothered by storing fees and willsimplywaituntilvaluesstabilise.

Additionally, the analysis noted that container selloffs will intensifyinthesecondhalfofthisyearbecausedepotswillrunout ofspace,priceswillcontinue tofall,andshipping linesandleasing companies will need to sell off some of that stock in order for the volume of second containers and trading to increase in the future anddrivedownthecostevenfurther.

Christian Roeloffs explained that since the process of diversification is a “long-drawn process”, we are yet to see visible signsofthisinthetradepatterns.

But there is an uptick in intra-Asia trade, according to Roeloffs, who said that “In the future, the larger trades will suffer a demand decrease so capacity needs to be adjusted towards regions with more sticky demand and more stable rate levels. Supply chains will need to be more resilient in the coming years. Theserelocation strategies willeffectively reducereliance onone production and supply chain hub to a more diverse, smaller tradingpattern.”