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International shipping prices are skyrocketing! Has the price of container equipment peaked?
Source: | Author:logistics-100 | Published time: 2021-08-09 | 527 Views | Share:

International shipping prices have skyrocketed! Has the price of container equipment peaked? According to the recent container statistics and leasing review and forecast annual report released by De Luli, the price of dry containers has doubled in the past year and hit a record high, but will fall in the next few years.


In 2020, dry container prices rebounded strongly from the previous year's low and reached their highest point since 2011 in the fourth quarter, an increase of 75% year-on-year. In the second quarter of 2021, the price of a 40-foot tall box exceeded $6,500, more than doubled from last year, and reached the highest value of Drewry since 1998.


John Fossey, Director of Container Equipment and Leasing Research at Drewry, said:

Due to the tight market capacity, shipping companies and leasing companies are expanding their fleets, resulting in a surge in demand for new containers and driving up prices. At the same time, the invest cost of the container factory is also rising, and the prices of special steel and flooring materials are rising. We expect that dry container prices will fall after reaching their peak in the third quarter. With the normalization of the container supply chain, dry container prices will fall further in the following years.

 

In sharp contrast to the trend of dry container prices are cold containers and tank containers. The prices of these two types of containers remained stable in 2020, but rebounded in the first half of this year. In the second quarter, they rose by 6.5% and 40% year-on-year. It is expected that the price of special containers will continue to rise moderately.

 

The report shows that in the first half of this year, the output of new containers soared. The output of dry containers in China increased by 235% year-on-year to 3 million TEU; the output of cold containers more than doubled to 260,000 TEU. De Luli predicts that the annual output will reach 5.2 million TEU, an increase of 67% year-on-year. The main buyers of these equipment are leasing companies, which account for 68% of the purchase of new boxes. However, according to De Luli’s forecast and analysis, shipping companies will increase their investment in containers in the short term.

 

At present, the demand for container equipment is still increasing. By the second quarter of 2021, the utilization rate of all leased containers has exceeded 99%, a record high. This makes the daily rent of long-term leased containers reach the highest level in 10 years, and the return on investment cash (ICR) has returned to its pre-epidemic level.

 

Fossey predicts that dry container rental prices will increase by 65% in 2021, which is the largest increase since the record in 1990 in Deluli. The growth rate of rental prices will exceed the growth rate of new box prices. This lag effect will keep rental prices at a higher level for a longer period of time, thereby further increasing ICR, but will gradually decrease thereafter.