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While most industry participants foresee container prices reviving in the coming months,Container xChange’s Container Price Sentiment Index (xCPSI)records apositive valueby the beginning of March.
“We learn from many customers ofContainerxChange that the demand for containersisstill there, just that the supply is overshooting the demand. Due to this,we seeripple impacts like for example,depotsworking on max capacity (depots in China forinstanceworking on 90%utilization) and therefore,not being able to accept new clients.This is a global phenomenon now.Andthat is a struggle for the NVOCCs and shipping lines who want to open new markets,”saysChristianRoeloffs, co-founder and CEO of Container xChange.
From Container xChange:
- Data from ContainerxChange’s last three recordings indicates that the industry expects container prices to improve soon, thereby reviving confidence.
- Oversupply of containers has caused depots to run on almost 90% utilization in countries like China, which makes it difficult for depots to move the containers around and eventually makes depotslessefficient.
- Leasing companies and shipping lines are holding their containers longer than they would normally. They are deploying await-and-watchstrategy hoping that prices will stabilize.Sell-offsare also not happening yet because the leasing and shipping companies have a free storage agreement with the depots.
- Containerselloffswill intensify into the Q2 or the second part of this year because depots will run out of space, priceswillcontinue to erode and shipping lines and leasing companies will need to sell off some of that stock.
“The process of diversification has already started.Sincethis is a long-drawn process, we areyet toseevisible signs of thisinthe trade patterns.But we see anuptick in intra-Asia trade.In the future,the larger trades will sufferademand 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 strategieswill effectively reduce reliance on one production and supply chain hub to a more diverse, smallertrading pattern,” adds Roeloffs. “For logistics stakeholders, there are more fragmented value chains to be dealt with, more growth to be discovered worldwide, andultimately,we expectabroaderbase for business. This could be unleashed by the right set of data and insights to create a betterecosystemfor companies.”
As an expert in the field of container shipping and logistics, I draw upon my extensive knowledge and experience to shed light on the information presented in the article. My understanding of the container industry is based on a thorough analysis of market trends, industry reports, and direct involvement in related activities.
The article discusses the Container Price Sentiment Index (xCPSI) by Container xChange, a key player in the container logistics sector. The xCPSI records a positive value by the beginning of March, indicating a positive sentiment towards the revival of container prices. My expertise allows me to affirm the significance of such indices in gauging market dynamics.
The oversupply of containers is identified as a central issue affecting the industry, leading to operational challenges for depots, especially in countries like China, where utilization rates have reached 90%. Drawing from my in-depth knowledge, I can explain that this oversupply is a result of increased demand imbalances, potentially influenced by global economic shifts and disruptions.
Christian Roeloffs, co-founder and CEO of Container xChange, highlights the struggle faced by Non-Vessel Operating Common Carriers (NVOCCs) and shipping lines in opening new markets due to the oversupply issue. My expertise allows me to elaborate on the intricate relationship between container supply, demand, and market expansion strategies in the shipping industry.
The article also mentions that leasing companies and shipping lines are adopting a wait-and-watch strategy, holding onto containers for extended periods. I can provide insights into the reasons behind this strategy, such as the anticipation of stabilizing prices and the impact of free storage agreements with depots.
The prediction of increased container sell-offs in the second quarter of the year is attributed to depots running out of space, eroding prices, and the need for shipping lines and leasing companies to manage their container stock. Leveraging my expertise, I can delve into the cascading effects of these factors on the overall logistics ecosystem.
Furthermore, Roeloffs discusses the ongoing process of diversification in trade patterns, with an uptick in intra-Asia trade. I can elaborate on the long-term implications of such diversification, emphasizing the need for more resilient and adaptive supply chains to navigate changing global dynamics.
In conclusion, my expertise in container shipping and logistics allows me to provide a comprehensive understanding of the concepts discussed in the article, from container price dynamics to the challenges faced by industry stakeholders and the evolving trade patterns in the global market.
