Asia Container Trade: challenges facing the Chinese container trade business

Asia Container Trade: challenges facing the Chinese container trade business

The container trade industry is a vital aspect of international shipping, facilitating overall movement of goods across the globe. With China being the global manufacturing hub, the container trade market has become a significant factor contributing to international logistics. However, the Chinese container trade market is currently facing challenges due to a slow market pickup, affecting the industry's growth and overall performance in the region. Therefore, by reading our article,  you will take a closer look at the factors contributing to this struggle and the knowledge to overcome this challenge.

The gloomy situation of global international shipping

The prolonged perspective of shipping industry

The global shipping industry has been facing such a complex scenario in recent years. After a long time surge in price, container rates are experiencing a substantial decrease as contract rates are moving closer to spot rates. 

Port with cargo ships dockedThe drop-in containerized freight rate is evident in different regions, with noticeable effects in export hub regions like China and Southeast Asia. This significant drop is the consequence of dynamics changes in supply and demand, and the demand for shipping remains vulnerable due to global inflation and restricted demand. 

An uncertain future still awaits the shipping industry, as there is low consumer demand in North Europe and the slow recovery of the Chinese container trade market, which suggest continued difficulties for the industry. Container prices and rates in mega hub ports across Asia, such as Ningbo, Shanghai, and Singapore have considerably dropped in the last year, indicating this situation may persist for some time.

The Chinese exports to different regions are in contrast: decline to the EU and US in 2022, while the container pick up to Russia is surging. The China shipping industry has recovered and recorded a trade surplus that keeps increasing. However, the trend in export growth slowed down as the year progressed. Unfortunately, the sluggish export growth will be a continuation for outbound containers trade. 

Specialist’s viewpoint toward current container trade

Many specialists have viewed the shipping trend as a threat to global academics. Mr. Christian Roeloffs, CEO & Co-Founder, of Container xChange believed that this container’s price decrease trend will impede economic growth and global trade. More than that, he indicates the lack of demand for long term commitments will affect the container market uncertainty. Despite demand for containers in Intra-Asia trade being better compared to other regions, the midterm outlook does not suggest an increase which was observed back in 2020 and 2021. Falling rates and shortage in container trade suggest a weak demand and slower economic growth. 

Additionally, John McCown, a founder of advisory firm Blue Alpha Capital, indicates that the elastic container rates will change the market power to carriers in the long term. They will get more aggressive to cut back the capacity of their vessels.

In conclusion, the global shipping industry is still facing an unpredictable situation, with container rates collapsing, weak demand from inflation and a shift from trade routes (more increase in export pattern from China to Russia). It is difficult to witness the rebound of the current shipping industry, but the situation can be recovered in the future.

DocShipper Advice : If you can’t consider the best shipping solution for your international trade business, DocShipper will provide you with the optimal solution related to international trade in the areas of its expertise including shipping, sourcing and 3PL. Find out our services websites and an expert will connect to you.

 

Contemporary China container pick up

 Sluggish market recovery in China container market

Container trade patterns and rates remain to be low. The recovery of Chinese container markets was influenced by Chinese exports which are below the expectation of bouncing back after Chinese’s new year. In October 2022, an oversupply of containers led carriers to seek ways to reduce their inventory. However, due to worldwide inflation and limited demand, there has been a significant decline in spot rates, contract rates, and container prices. The major Asia-US route has seen a sharp decrease in freight prices, dropping by 80%.

Contemporary china container pick up

The statistics are not optimistic about container market pick up, a report from Container Xchange noted that shipping freights between Asia and the US on the West Coast and East Coast in January 2023 will be 11% and 84% lower, respectively, than in January 2020 and 2022.

The same situation also happens in North Europe where consumer demand is unlikely to recover soon.  January 2023 witnessed the rates for picking up 20ft containers and 40ft HC containers from China to North European ports were low, averaging $861 and $823, respectively. Compared back to January 2022, the average pickup fee for a 40HC container on this same route exceeded $3,000. The prices of 20ft containers in the top three ports of Asia: Ningbo, Shanghai and Singapore all observed plunging with Ningbo decreased from $2,460 to $1,290, Shanghai from $2,370 to $1,270, and in Singapore went down from $2,410 to $1,240. 

 

China shipping performance toward different regions

Low export performance between China container trade with US and EU

Despite all challenges back in 2022, China still experiences a trade surplus which grew 29.7% from the pandemic year. The export growth is large initially in the first quarter, but as the year progresses, it will particularly slow down when Interest rates were raised by central banks to combat inflation.   

 

All-time high record with Russia in shipping industry

Port of Hong KongThe exports to Russia increased when Russia opened more trade routes with China. The exports index to Russia increased 8.3%. According to GAC, China's imports of coal and oil from Russia helped the two countries' goods trade reach 1.28 trillion yuan ($190 billion) in 2022, a 30% increase from 2021. Even though the ratio has increased in China-Russia trade, picking-up rate for leasing containers from Shanghai to Moscow has plunged from $2,425 in January 2022 to $832.

DocShipper Alert:  Companies must be alert about shipping to Russia and vice versa due to the sensitivity in politics. Before starting trade with Russia, it is wise to connect to a 3PL service provider like DocShipper who has professionals with years of experience when it comes to logistics and suggest the most optimal logistics solution. Get in touch with us through websites for more experts solution.

South-East Asia experience slump in container’s pick-up

Boxes stacked in a container

Southeast Asia also experienced a significant drop-in freight rate and container prices, the same as China. According to the statistics, the average container price fell by 32% Y-O-Y, from $3,798 in January 2022 to 2,590 in January 2023.  Pickup fees dropped   by 78% from $311 in December 2022 to $67 in January 2023 and the average pickup fees on the South-east Asia-US trade route decreased by 6.38% in January 2023.

Conclusion

In conclusion, the China container trade market has been struggling with slow market pickup in recent times. Low containers pick up rates have affected international trade and the global economy.  It is difficult to adapt to these uncertainties, therefore you will need DocShipper. We have expertise in dealing and consulting with shipping, sourcing, 3PL or moving.  DocShipper was established specifically to redefine the international logistics process. Contact us to find out how we assist you.

DocShipper Advise: We help you with the entire international shipment, so don't hesitate to contact us if you have any questions!

  • You don't trust your container supplier? Ask our experts to do quality control to guarantee the condition of your goods!
  • Do you need help with the logistics? Our international freight department supports you with door-to-door services!
  • You don't want to handle distribution? Our 3PL department will handle the storage, order fulfillment, and last-mile delivery!
  • Having trouble securing custom clearance? Enjoy our custom clearance services, we handle the whole process for you!

 

DocShipper China | Procurement - Quality control - Logistics

 

Alibaba, Dhgate, made-in-china... Many know of websites to get supplies in Asia, but how many have come across a scam ?! It is very risky to pay an Asian supplier halfway around the world based only on promises! DocShipper offers you complete procurement services integrating logistics needs: purchasing, quality control, customization, licensing, transport...

Communication is important, which is why we strive to discuss in the most suitable way for you!

Comments for this post are closed.