Covid shutdowns at Chinese ports squeeze container rates

Weary shippers are likely to encounter reduced container availability and rising prices at key maritime hubs in the coming weeks, thanks to a continuing spate of Covid-19 outbreaks at ports in China and Vietnam, according to an analysis by container leasing platform provider Container xChange.

The disruptions spring from a weeklong lockdown of the port of Yantian in May, and were since perpetuated by a separate closure of Ningbo port in August, Hamburg, Germany-based Container xChange said.

“We saw a real and measurable spike in container prices and a major drop in container availability as measured by our Container Availability Index (CAx) when terminals at Yantian saw operations disrupted through most of June,” Christian Roeloffs, co-founder of Container xChange, said in a release. “Early indicators suggest we are likely to see the same impact in Vietnam and at Ningbo.”

By the numbers, average container prices (defined as the average price of the transactions on the Container xChange platform covering all container sizes including 20 ft. and 40 ft. dry containers) at the port of Yantian jumped nearly three-fold from $5,515 in June to $15,336 this month. By comparison, container prices rose by much smaller increments at the ports of Shanghai and Qingdao over the same period, swelling at Shanghai from $4,468 to $5,570, and rising at Qingdao from $4,793 to $5,203.

“Whether we see a further spike in container prices at Ningbo will probably be determined by how much cargo was disrupted at the port and whether we see additional shutdowns later this month,” Johannes Schlingmeier, CEO & Founder of Container xChange, said in the release. “Even if there are no additional closures it is likely that container prices will rise on lower availability in the coming weeks due to the lag between liner schedule disruption and container availability and pricing.”

The market pressure comes even as demand for containers has never been higher, demonstrated by record import and export volumes posted at ports in Virginia and Georgia last week.

Port Houston also broke a record this week, saying that July was its biggest month ever recorded for container twenty foot equivalent units (TEUs). The Texas facility recorded 297,621 TEUs for the month, an increase of 27% compared to July 2020 and an increase of 224 TEUs from its previous record, set in March 2021.

The hot demand is caused by unprecedented consumer spending which has driven an increase in cargo across all commodities at the same time that the global supply chain experiences significant challenges like schedule disruptions, the bunching of vessels, and workforce strain, according to an analysis by Port Houston.

In response, the port is boosting investments in infrastructure expansion, announcing a $37 million contract in July to purchase three new dockside electric container cranes, and taking delivery of nine new hybrid rubber-tired gantry cranes by late August. “Port Houston is not immune to many of the challenges facing our industry and we are committed to addressing these head-on,” Roger Guenther, the port’s executive director, said in a release. “Our team works tirelessly to deliver the reliability and efficiency our customers expect and deserve, and we continue to invest in our infrastructure so we are ready for future growth.”