A strong shipping market helped secondhand container prices grow to an above-average finish in 2024, but it’s unclear whether that will be sustained heading into the new year.
“With inflationary pressures persisting and central banks maintaining higher interest rates for longer, container owners will face increased total asset costs,” said Christian Roeloffs, co-founder and chief executive of online marketplace Container xChange, in a forecast report. “This inevitably pushes breakeven leasing rates higher and raises costs for container users. Sailing through will require sharper strategies to maintain profitability.”
Uncertainties over geopolitical tensions, trade wars, and tariff threats helped push up prices in late 2024 and are expected to persist into the first quarter of 2025. That implies higher asset costs for container traders, impacting profitability in the short term.
“While global GDP growth is forecasted to remain stable, the risks of overcapacity loom large, especially with strong supply growth in vessels and containers over recent years,” Roeloffs said. “If capacity is released, such as through resumed Red Sea passages, overcapacity could escalate quickly. Container owners will need to adopt agile leasing strategies and seek out profitable niche trades.”
“For container users, staying competitive will demand a continual evaluation of the cost differences between SOC [shipper-owned container] and COC [carrier-owned container, which are rented to shippers] operations.”
The report cited anecdotal information that Chinese manufacturers and wholesalers would flood the U.S. and Canada with used containers owing to huge stockpiles, depressing prices. At the same time, recent increases in steel prices have influenced thinking that container prices are heading upward.
The report observed “notable skepticism” about the implementation of tariffs promised during President Donald Trump’s campaign, which could influence trade.
Taxes on used containers are generally lower than on brand-new units, the report stated, which could shape upcoming strategic decisions by manufacturers and wholesalers.
Container leasing rates are expected to remain “subdued” until mid- to late February as factories in Asia shut down for Lunar New Year.
“Container trading is beginning to slow in China, signaling the usual seasonal lull,” said Arno Lindner, key account manager, Container xChange, in the forecast. “Our customers are noticing that container manufacturers in China have stopped taking new orders, reflecting a cautious approach to production planning.
“Interestingly, while China-North America COC prices are softening, SOC prices are showing a slight uptick due to reduced container stock from suppliers ahead of the Lunar New Year. This divergence would lead potentially to a shifting demand and price pressures in the coming weeks.”
Container prices on the Container xChange platform have marginally declined for 40-ft. cargo-worthy containers in China. The average prices for 40-ft high cube containers in China have declined by 5% month-on month on average across locations in December.
Among other factors, Roeloffs said data suggests manufacturers are balancing strong backlogs and shipment improvements against declining new orders, but the growing inventories could signal overstocking if demand does not rebound soon. “This indicates the need for careful inventory and production planning as manufacturers deal with slowing orders and prepare for uncertain demand in 2025,” he said.
In the U.S., the report found December container prices at Dallas, Miami, New Orleans and Houston stood out for y/y and m/m growth, indicating sustained upward trends. Declining prices were seen at Los Angeles-Long Beach, New York, Toronto and Vancouver, Canada.
Globally, U.S. locations in the top 10 for 2024 y/y surging prices include Memphis (tied with Delhi, India at #2, up 72%), New Orleans (#3, up 67%), and Houston (tied with Vladivostok, Russia at #10, up 56% ).
Of the 57 world locations with the steepest drops, the list included Indianapolis (#56, down 45%), Calgary (#54, down 14%), and Savannah (#52, also down 14% ).
The forecast said that while continued diversions away from the Red Sea by ocean carriers and seasonal effects leading up to the Chinese New Year are supporting elevated freight rates, their sustainability remains uncertain.
“Much will depend on whether the supply-demand imbalance persists into Q1 and Q2,” the forecast stated. “In the near term, the market is likely to remain tight, but stakeholders should be prepared for shifts as seasonal demand tapers and geopolitical or economic developments unfold.”
Find more articles by Stuart Chirls here.
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