The U.S. container trading market is experiencing heightened volatility due to several influencing factors. The recent strikes at East Coast ports have left a lasting impact on supply chains, while focus shifts to the U.S. elections.
"The recent strikes may have ended, but the storm is far from over. With unresolved issues surrounding automation, we are on the brink of another disruption come January 2025," says Christian Roeloffs, co-founder and CEO of Container xChange. “Given the unresolved issues around automation, I believe there are strong chances of another disruption in January. The unions strongly oppose any form of automation, and this unresolved matter raises the likelihood of another strike in January.”
Key takeaways:
- Conversely, China is facing significant domestic challenges, with weak consumer spending and slowing income growth. While exports have shown resilience, broader economic concerns, including a slowdown in domestic consumption and property investment, could impact supply chains. Reduced demand for goods within China, coupled with U.S. retailers and wholesalers holding considerable inventory, is creating a more challenging environment for container trading and leasing companies, as lower shipping volumes and excess container capacity put pressure on both demand and leasing rates.
- The Container Price Sentiment Index (xCPSI) for September and so far in October indicates a notable rise in the number of supply chain professionals globally anticipating an increase in container prices. This expectation is driven by limited supply and steady demand.
- In September, average container prices in the United States remained relatively stable. However, on a global scale, Asia and Europe experienced the most significant price hikes, while the Middle East and the Indian Subcontinent (ISC) saw a 6% decline. The Middle East experienced a 7% price surge in early October, indicating market volatility in that region.
- Key factors influencing Q4 container prices entail impact of strikes and elections, demand-supply dynamics, cyclic nature of demand and more.
- Mexico's rise as a significant trade hub is fundamentally transforming U.S. container availability and logistics. As companies move production from China to Mexico to take advantage of the USMCA and avoid U.S. tariffs, there has been a 26.2% increase in container trade between China and Mexico, alongside record border crossings at the U.S.-Mexico border, particularly in Laredo, Texas, which has emerged as a key logistics center.
- Looking ahead to 2025, the U.S. container market will likely be shaped by the resolution of labor disputes and the broader geopolitical landscape. The outcome of the U.S. election will significantly influence trade and domestic fiscal policy, subsequently affecting container prices. The topic of automation will remain prominent, as the International Longshoreman’s Association (ILA) is anticipated to revisit this issue in their forthcoming negotiations.
“For container traders, this translates to a decrease in container availability in inland U.S. locations, which is likely to push trading prices higher. Furthermore, with the increased demand for cross-border trucking and rail services, along with the need for expanded border container facilities, the transition from direct China-U.S. routes to China-Mexico-U.S. routes will be a crucial trend to monitor,” says Roeloffs.