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Thursday, May 19, 2022

Maritime Logistics Professional

April 19, 2022

The Supply Chain: As Empty Containers Stack Up in the U.S., Challenges Persist

Copyrigt zhu difeng/AdobeStock

Copyrigt zhu difeng/AdobeStock

According to a recent analysis by Container xChange, one of the many challenges for the supply chain now is the overflowing container depots in the U.S. and the pileup of empties that will push the container prices further downwards in the mid-term.  

The analysis shows that container prices are declining in the U.S. by as much as 30% in the past two months across the east and the west coast and more than halved at some ports from 2021 prices. Bigger carriers, as per a report by CNBC recently, are shipping empty containers back to Asia from the U.S. to increase profitability and ensure that the high-value cargo from Asia reaches back to the U.S. where the demand is.  

“In general, logjams and disruptions lead to increase in container prices, especially in second-hand container prices because more container volume is tied up along the logistic supply chain. However, in the United States, there is a pile-up of empties as those containers cannot be repatriated back to Asia because of several disruptions one after the other in the past 2 years, and more recently due to the China lockdowns and Russia Ukraine crisis,” said Christian Roeloffs, cofounder and CEO, Container xChange.  


 Christian Roeloffs, cofounder and CEO, Container xChange

“We might see a continued slide in container prices because depots are overflowing of the containers. Carriers and other container owners will be getting desperate to get rid of those units. Once we see depots overflowing (and this is also what we expect in the midterm once disruptions ease up a little bit), container turnaround times becoming faster and shorter again, container fleet utilization (the number of trips that container can take on average within a given year) increasing again, we do believe that container availability on a global scale will become more abundant again.”

The average container prices for 40 ft HC containers at the port of LA dropped by 20% since late February from $3467 to $2754 in April.  These prices are expected to further decrease in the coming few weeks according to the xChange trading insights tool.  Similarly, the average price for 20 ft DC at the port of Los Angeles is $1661 as of 11 April 2022. These were much higher in the year 2021, peaking at $3080 towards the end of August 2021. Almost halved since the last year.  

"It does seem that the China lockdowns have impacted the U.S. logjam positively in the short term. But there will be a lot of disruptions when the lockdowns are lifted, and vessels will storm the east as well as the west coast ports. There will be an added element of panic shipping. This will further increase supply chain pressures and logjams in the U.S.”