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Among the many downsides of the COVID-19 pandemic was the unprecedented shortage of shipping containers, marking a profound effect on the global supply chain industry and creating a huge demand supply imbalance. Coupled with a few more global factors, the entire situation led to a sharp increase in the prices shipping contains across the world.
According to Statista – a trusted provider of global consumer and product data – container freight rates oscillated dramatically between January 2019 and April 2023. The year 2021 saw an especially steep increase in global freight rates, reaching a record price of nearly USD 10,400 in September 2021. In April 2023, the global freight rate index stood at more than USD 1,700, nearing the pre-pandemic rates recorded at USD 1,720.
However, as a respite to the Indian supply chain industry, the shipping container prices are reported to have crashed nearly 40% year-on-year. Although container prices are decided based on a variety of factors, it is anticipated that this fall will lead to reduced transportation costs, which will certainly help India achieve it’s lower logistics cost estimates.
Christian Roeloffs (Co-founder and CEO, Container xChange), while acknowledging the impact of recessionary trends on logistics trends in the West, said that the Asian markets might be in a better situation
”There is some positive news in the container shipping industry, particularly in Asia. Freight rates and container prices have stabilised in the region, showing resilience in the intra-Asia trade routes. This could translate into more predictable shipping rates and potentially more stable supply chains, benefiting businesses that rely on container shipping”
Resonating the sentiment, Neermoy Shah (Associate Director, India Ratings and Research), feels the lowering of the freight costs will benefit companies and add to their margins as most of the freight cost particularly in mid-sized entities is borne by the company itself and they may or may not be able to pass on to their customers.
The fall in container prices in India is a result of the over-supply of containers at major Indian ports. The scenario was quite opposite during the peak pandemic years. Data from the Container Availability Index (CAx) indicates a significant increase in the number of inbound containers in 2023 at the ports of Nhava Sheva, Mundra and Chennai.
One of the main drivers of the price surge was the shortage of containers in key exporting regions, especially Asia. Lockdown measures and reduced production capacity affected container availability. As a result, shipping lines prioritized containers in high-demand areas, leading to container shortages and increased prices for those in need – a trend that seems to have reversed for good.
Here are some numbers for container prices back in September 2021 –
20-foot Standard Container:
Asia to North America: USD 6,000 – USD 8,000
Asia to Europe: USD 4,500 – USD 6,500
40-foot Standard Container:
Asia to North America: USD 8,000 – USD 11,000
Asia to Europe: USD 6,000 – USD 8,000
40-foot High Cube Container:
Asia to North America: USD 9,000 – USD 12,000
Asia to Europe: USD 7,000 – USD 9,000