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The company for online container rental and trading, Container xChange, reports that the rental prices for shipping containers to the U.S. West Coast have surged by over 220% since the Red Sea crisis at the end of November/December last year.

U.S. shippers are diverting goods from the East Coast to the West Coast ports, increasing the throughput at Southern California ports and driving container rental prices to unprecedented levels.

A customer of Container xChange stated, "We anticipate equipment shortages as the repositioning of containers back to Asia to meet the demand for shipping goods to the U.S. does not proceed smoothly. Furthermore, disruptions at the Suez Canal, Red Sea, and Panama Canal are likely to lead to high demand for the West Coast route."

In fact, Southern California ports have also witnessed a similar surge in cargo volumes in January. The Port of Los Angeles processed 855,652 TEUs in January, marking the "second-best start to a year in history."

During the remarkable surge in cargo in January 2022 due to the pandemic, the sixth consecutive month of growth compared to the same period last year, there was an 18% increase compared to January 2023.

In Long Beach, cargo volumes increased by 17.5% compared to the same period last year, with a total volume of 674,015 TEUs. Import cargo increased by 23.5% to 325,339 TEUs, while export cargo decreased by 18.1% to 86,525 TEUs. The movement of empty containers through the port increased by 28% to 262,151 TEUs.

Recently, John McCown, an analyst at Blue Alpha Capital, researched the imbalance of containers at three major ports: Los Angeles, Long Beach, and New York. He noted that this imbalance has increased significantly since 2010.

Los Angeles recorded an import-to-export imbalance ratio of 3.44, meaning that for every 3.44 imported containers, there is only 1 exported container. This figure increased by 1.28 compared to 2010 and 0.76 compared to 2019. The ratio in New York was 3.1 in 2023, an increase of 1.41 and 2.58 times compared to 2010 and 2019, respectively. Long Beach also experienced a similar imbalance, with this ratio reaching 2.97 last year compared to 2.55 in 2019.

McCown said, "Although the overall trend of increasing imbalance ratios remains stable, it has accelerated in recent years."

According to McCown's research, during the five-year period from 2018, the imbalance of goods at major U.S. ports increased by 54% compared to the previous 10 years from 2008.

"The fact that U.S. export inefficiency has exacerbated the imbalance problem," McCown said. He believes that the "impact of tariffs on China" is the main reason for the decline in U.S. exports since 2018, with a decrease of 12.2% in the five years leading up to 2023.

This imbalance situation could worsen, as Christian Reoloffs, Co-founder and CEO of Container xChange, pointed out: "Increasing consumer spending and retail data suggest that our industry can expect a stable recovery in cargo demand, leading to relatively higher container demand as retailers replenish inventory and meet consumer orders."

According to Container xChange, U.S. consumer spending is increasing, rising to 3.3% annually in the fourth quarter of last year with lower inflation and "stable" household spending, indicating a positive outlook for the U.S. economy.

Source: ContainerNews

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