Temporary Rush Boosts Container Traffic but Challenges Loom Ahead

Temporary Rush Boosts Container Traffic but Challenges Loom Ahead

Some routes experience high demand for shipping containers

China to U.S. trade route has been seeing a recent surge in Container Leasing Charge per Route as observed in its September Container Market Forecaster published by Container xChange, an online container logistics platform.

The Container Leasing Charge per Route is the highest on the China to US trade route and 6 trade routes on this lane are in the top 7 most expensive leasing charge routes.

This potentially indicates that these routes are experiencing a high demand for shipping containers and may experience elevated leasing charges as suppliers adjust prices to match market conditions.

Further, the routes may also be experiencing this surge in container leasing charges based on seasonal demand, such as during peak holiday shipping periods.

Back-to-School Rush Sparks Optimism in Container Transportation Sector

The National Retail Federation has reported that this year's back-to-school shopping season is going to be a big one. People are expected to spend a lot, around $41 billion, which is way more than what they spent before the pandemic in 2019, which was $26 billion.

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Also, each household is likely to spend more, going up from $697 to $890 per person for this year, without considering price increases.

Further, the Global Port Tracker report from the National Retail Federation and Hackett Associates predicts that the import cargo volume at significant US container ports will hit 2 million TEUs (twenty-foot equivalent units) during September and October.

This optimistic outlook from retailers indicates their confidence in the upcoming holiday season.

This optimism is also evidenced by the highest-ever Container Price Sentiment Index (xCPSI). The index has seen an uptick in price sentiment starting August 2023.

The Container Price Sentiment Index (xCPSI) conducts market surveys simultaneously, gathering the combined insights of industry experts on container price trends and quantifying them.

This creates a useful measure that offers insights into what to expect in the container market in the near future. In August till 11 September, the survey drew participation from 1045 supply chain professionals.

This surge in sentiment reflects the industry's growing belief in an upcoming turnaround, injecting a sense of optimism into the landscape.

For now, the surge in back-to-school shopping is causing a temporary increase in the demand for shipping containers. However, changes in the way Americans approach holiday shopping, influenced by economic factors, could impact consumer confidence.

Christian Roeloffs, cofounder and CEO of Container xChange said: “If you look at the US, the market looks relatively upbeat. US inflation is expected to remain relatively stable at 0.2% month-on-month, coupled with a strong labor market.

"Jobless claims are still at relatively low levels, and retail spending is slightly increasing. All those points towards a soft landing, as also mentioned by Fed Chief Yellen over the weekend."

Read More: As Overstocking Rationalises Container Rates Set for Subdued Rebound

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