"Can't Get Even with Extra Payment"…Companies Struggling with Containers That Surpassed Record High Prices

Since Late Last Year, Cargo Volume on Asia-Americas Routes Up
3.65 Million KRW → 7.08 Million KRW, Doubled in One Year
China Sweeps Global Containers... Congestion in US

Empty containers at Gwangyang Port yard

[Asia Economy Reporter Dongwoo Lee] A, the CEO of a mid-sized domestic international logistics forwarding company, these days cannot sleep at night just thinking about containers. Setting aside the soaring prices, securing containers itself is difficult. The company has yet to receive the containers ordered at the end of last year. CEO A lamented, "My main task is to contact suppliers dozens of times a day to check box supply," adding, "Demand for containers is overflowing, but supply cannot keep up, so suppliers are charging whatever price they want."

An emergency has been triggered in the export front, which is recovering faster than expected. The shortage of containers, essential for cargo transport, is intensifying, causing prices to rise sharply. Although global shipping companies are responding to box supply, the skyrocketing prices are deepening the worries of domestic export companies as well as small and medium-sized shipping firms. ▷Related article on page 3

According to the shipping industry on the 22nd, the new price of the most commonly used 40-foot containers (FEU) for export was around $6,400 (about 7.08 million KRW) at the end of last month, nearly double compared to the same period last year ($3,300, about 3.65 million KRW). The 20-foot containers (TEU) also traded around $3,600, up nearly $1,800 during the same period. Even then, it takes at least three months or more to wait for delivery after ordering.

The sharp rise in container prices is also confirmed by indices. According to Container xChange, a container repositioning consultancy, the 'Container Availability Index (CAx)' recorded 0.35 in the fourth week of last month. This index means that the lower it is below 0.5, the more severe the shortage of empty containers.

The industry views the extreme supply-demand imbalance on the Asia-Americas route as the cause of the rising container prices. Due to reduced container production in the first half of last year amid the COVID-19 pandemic, and a sharp increase in cargo volume on the Asia-Americas route from the second half, China and the United States have been sucking up containers worldwide like black holes.

The industry complains that the rise in container prices is directly impacting the profit margins of export companies and small and medium-sized shipping firms. Small shipping companies and forwarder agencies explained that despite freight rates tripling compared to last year as of this month, after covering the costs of securing containers, operating profit margins relative to sales may actually decrease.

Geonwoo Choi, a senior researcher at the Shipping Big Data Research Center of the Korea Maritime Institute, said, "While the increase in cargo volume this year can be seen as a positive for shipping companies due to rising freight rates, container prices can be a burden for export companies," adding, "Although the global market is recovering rapidly, if containers are not secured in time, exports may struggle to keep pace with the global market atmosphere."