Premium

PV Price Watch: Peak delays in container shipping behind us as prices edge slowly downwards

Facebook
Twitter
LinkedIn
Reddit
Email
The high cost of shipping has been a major factor behind the soaring price of modules. Image: PV Tech

Delays in the shipping industry have likely peaked already, with the turnaround time for containers predicted to fall month after month moving further into 2022. While the price of moving containers from China to Europe and the US remains very high, they have come down slightly since last year.  

Considering the international supply chains solar relies on, these factors, taken together spell good news for European and US solar developers after more than a year of severe delays and extortionate prices, which have driven up the cost of modules.

This article requires Premium SubscriptionBasic (FREE) Subscription

Unlock unlimited access for 12 whole months of distinctive global analysis

Photovoltaics International is now included.

  • Regular insight and analysis of the industry’s biggest developments
  • In-depth interviews with the industry’s leading figures
  • Unlimited digital access to the PV Tech Power journal catalogue
  • Unlimited digital access to the Photovoltaics International journal catalogue
  • Access to more than 1,000 technical papers
  • Discounts on Solar Media’s portfolio of events, in-person and virtual

Or continue reading this article for free

That’s the view of George Griffiths, global pricing specialist at S&P Global Platts, who also discussed upcoming regulatory changes to the shipping industry with PV Tech Premium.

In October last year, the backlog of ships waiting outside the twin ports of Los Angeles and Long Beach reached an all-time high of 112. On 9 January the number still stood at 109 but as of 22 February, it was down to 66.

That number is now coming down slowly but surely and Griffiths believes we may have seen ‘peak delays’ in the shipping industry.

In October, when PV Tech Premium last provided a shipping update on the state of delays, it was commonplace for 18-day delays for deliveries to the US and Europe from Asia. Now, deliveries from Asia to Europe are delayed by around a week, while to the US West coast it’s around 10 days and the East coast is about seven days, says Griffiths.

He expects to knock a couple of days of delays off every month from now on, although he caveats that is with the absence of any major disruptions in the shipping industry, which is not a given.  

Lunar new year also acted as a helpful ‘circuit breaker’ in this respect, as it does every year, when Chinese production grinds to a standstill and demand for containers drops accordingly. Shipping companies use this time to address backlogs and stock containers for transport, further easing pressure on delays.

But delayed delivery of ships is not the only issue. The ships need to dock, be unloaded, refuelled and turned around, so the time spent on the quayside is equally as important.

Thankfully, this is coming down too. Higher vaccination rates, fewer COVID-19 restrictions and an economic rebound have meant more workers in ports, more truckers and more drivers, says Griffiths, adding this would have a positive feedback effect on delays.

Meanwhile, there has been minimal movement on pricing. Couriers are still charging sky-high rates as demand far outstrips supply, with companies keen to capitalise on their winning hands after years of losses, in some cases.

Nonetheless, prices have come down a bit. Asia to Europe is now roughly US$14,500 (US$16,000 for the UK), Asia to the US West coast is about US$9,500 and to the East coast it’s in the range of US$11,000, says Griffiths, although companies often charge premiums on top of these rates.

Finally, new regulations set by the International Maritime Organisation (IMO) are set to come into force from 2023 onwards, which will see more polluting ships taxed greater. Despite this, they are likely to remain on the waters given the profits to be made can easily offset any additional costs incurred.  

While this isn’t great for the planet, it will mean supply isn’t taken offline, which should help ease delays further.

Massive profits made since the start of the pandemic will likely go into developing a more advanced, lower carbon fleet as shipping companies look to the future, says Griffiths. There are currently a huge number of ships being built to accommodate global demand –standing at 20% of global supply – but these won’t come online until 2023. But when they do, it should be a game-changer for prices.   

Read Next

Subscribe to Newsletter

Upcoming Events

Solar Media Events
April 17, 2024
Lisbon, Portugal
Solar Media Events
May 1, 2024
Dallas, Texas
Solar Media Events
May 21, 2024
Sydney, Australia