Is Chinese New Year the turning point for container shortage?

An end to the container shortage is in sight, according to figures of the Container Availability Index (CAx). With values of 0.34 for twenty footers and 0.37 for forty footers, Chinese New Year could be the turning point, the company behind the index stated. A 0.5 value would indicate a balanced market.

For months, containers were extremely scarce across China, and prices have skyrocketed to record highs. This was caused mainly by an unexpected demand for containerised goods in Europe, created in the wake of global social lockdowns. High container production and the aggressive repositioning of empties back to China may have helped to change this balance, argues Container xChange, which developed the CAx.

Positive trend

The index tracks millions of container moves to monitor and forecast equipment availability.
“With a growth of 37.5 per cent for 40ft reefers and even 200 per cent for regular 40ft containers in January compared to December 2020, the Container Availability Index finally shows a positive trend for shippers and forwarders who are looking for equipment in Shanghai”, says David Amezquita, head of data insights at Container xChange.

Although these figures are highlighting the ports, which have the largest throughput, the increased availability of containers will have its impact on rail freight too. Based on the forecasts, Container xChange expects that the equipment situation remains stable in the coming weeks. “Until mid-February, the Container Availability Index will settle at around 0.35 for 20ft and even 0.38 for 40ft containers.”


Container Availability Index in 2020/ 21 for 20DCs, 40DCs and 40HCs in Shanghai

How bad was it?

How bad the situation was, can be seen in the index figures of last year. For Shanghai, a city traditionally known for a deficit of containers, the index reached record lows in December 2020 of 0.13 for 40ft containers and to an even lower 0.08 for 40ft reefer containers. This indicated a decrease of 75 and 83 per cent compared to equipment levels in the first quarter of 2020.

“An index of 0.5 describes a balanced market, below 0.5 a shortage of containers”, explains Johannes Schlingmeier, CEO of Container xChange. As a side effect, pickup charges for one-way containers skyrocketed to $1850, and prices for used containers climbed up to $2493 for 20 footers across China, according to Container xChange.

Shipments on hold

“In all my years working in this industry, I have never seen anything this crazy”, said Osmo Lahtinen, the founder of the Finnish container leasing company OVL in December. In the past week, the company did witness a slight decrease in bookings of containers, but Lahtinen hesitates if this really means a turning point. It looks like this is only because of a lack of space on rail and vessels and not because of a decreased demand for exports from China.

According to Container xChange, the positive container availability trend for Shanghai proves that actions taken to bring back empty containers from Europe are working. “The aggressive repositioning, which has grown by +125 per cent in December on the online platform Container xChange, and the increased number of newly built containers contribute to normal availability levels again”, the company states.

“Chinese New Year could indeed be a turning point to the container availability”, says Lahtinen. “On the other hand, lots of investment projects (power plants, new factories and other heavy industry) shipments have been put on hold due to Covid. These types of shipments will soon become active again, once the restrictions are lifted and could thereby again increase the demand especially for SOC-containers.”

Author: Majorie van Leijen

Majorie van Leijen is editor of RailFreight.com, online magazine for rail freight professionals.

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