For months, U.S. ports have struggled to deal with a backlog of empty containers, which they blame for port congestion and their inability to handle the influx of imports. While congestion would generally lead to more significant freight costs, new research from Container xChange, a container trading and leasing platform for shippers, reveals that the accumulation of empty containers is contributing to the drop in freight prices. They also expect ongoing downward pressure on container pricing, given the likelihood of more disruption at U.S. ports.

The Southern California ports called on shipping companies to deploy sweeper vessels to clear the additional boxes out of the ports, citing the issues caused by the pileup of empties. To deal with the increased number of empties, several ports around the United States opened new storage facilities. While declaring that they were making progress in clearing the empties, the Ports of Los Angeles and Lengthy Beach recommended putting fees on long stay time empties. However, for example, the Port of Los Angeles recorded a roughly 8% imbalance in March, with 36,000 more containers entering than outgoing.

"In general, logjams and interruptions contribute to a rise in container pricing, particularly second-hand container prices," said Christian Roeloffs, co-founder and CEO of Container xChange. "However, there is a backlog of empty containers in the United States since those containers have been unable to return to Asia owing to a series of disturbances over the previous two years, most notably due to China's lockdowns and the Russia-Ukraine crisis."

Container rates in the United States have dropped by as much as 30% in the last two months, according to Container xChange, on both the east and west coasts. They point out that costs have dropped by more than half compared to 2021 pricing at several ports. According to the xChange trading insights tool, these prices are anticipated to drop much further in the following weeks.

Since late February, the average container price for 40 ft HC containers at the Port of Los Angeles has declined by 20%, from $3467 to $2754 in April. According to the xChange trading insights tool, these prices are anticipated to drop much further in the following weeks. Similarly, as of 11 April 2022, the average price for 20 ft DC in the port of Los Angeles is $1661. These were substantially higher in 2021, reaching a high of $3080 at the end of August. Since last year, it has nearly halved.

"The Chinese lockdowns have had a favorable influence on the US logjam in the near term." However, when the lockdowns are removed, there will be significant disruptions, with boats storming both east and west coast ports. There will be an element of panic shipping added to the mix. This will exacerbate supply chain constraints and bottlenecks in the United States."

"We know that the port labor unions are tough negotiators and that this event has historically resulted in work stoppages." This year, cargo unloading and loading will be virtually difficult if this happens again. I'm not optimistic that the discussions will be completed in one and a half months because that's all we have before our present contract expires in early July. And it's unclear if the port and terminal unions will be able to reach a deal with the employers by then. Of course, this would cause interruptions at the start of early peak season shipping, a critical time for the shipping business that will have an impact on consumer demand fulfillment."

"Aside from these interruptions in the United States, the worldwide economic situation is causing several hurdles for shippers, tiny and medium-sized businesses. Smaller players are still striving to create tactics to pile up stock ahead of the peak season, despite the fact that larger enterprises have an advantage due to economies of scale."

"Due to intermodal congestion on the west coast of the United States, many shippers have shifted inbound cargo and US imports to east coast ports, which are typically smaller and less suited to handle such high quantities." They've been adjusting this for a while now, and they're still shifting it. Because of the huge lockdowns in China, even now that congestion or port waiting times are reducing on the transpacific in front of the West coast ports. As a result, wait times on the west coast are already increasing. Shippers are continuing to move to the east coast because they expect delays resulting from labor union discussions, which will begin in early May and run until the end of the month.

Shippers are continuing to move to the east coast because they expect delays as a result of labor union discussions, which are set to begin in early May and roughly coincide with the start of peak season. When the peak season is about to begin, this is never a good combination. Historically, east coast ports have not been able to handle such large volumes. I don't think this situation will get any better. When the China ports reopen, there will be a lot of disturbances, and we'll see a flood of inbound containers loaded with cargo on both the east and west coast ports," Roeloffs said.