Industry News

Container Chaos: What Ocean Shippers Need to Know

2020-12-10
  • The restart of manufacturing in China followed the early spring slump in global shipping that left millions of 40-foot containers stranded or out of position in countries that import from Asia.

  • Container availability has been further impacted by soaring demand because of the approaching holiday season, ongoing demand for Personal Protective Equipment (PPE), a reduction in global air freight capacity, changing ecommerce trade-flows, and anticipated demand for refrigerated containers for COVID-19 vaccine logistics.

  • Manufacturers say they are no longer able to fill orders for new containers, even though the price of a new 40-foot box has climbed from $1,600 to $2,500 over the past year. 

  • Carriers have responded to the equipment shortage, port disruptions and other turmoil by imposing surcharges that have cause friction with shipping customers.

  • In China, the ports most severely affected are Shenzhen, Xiamen, Shanghai and Ningbo. Verification has become particularly important as some carriers have imposed restrictions on the release of empty containers to shippers loading for departure at Chinese ports.


What’s behind the imbalance

  • Container demand is soaring because of the approaching holiday season and because many retailers are only now restocking or adding “safety” stock to 
  • normal inventories to buffer themselves from possible supply disruptions that could be triggered by a second wave of the virus.

  • The reduction in global air freight capacity, along with soaring demand for Personal Protective Equipment (PPE), have added volume and stress to ocean lanes.

  • Containers have been piling up in the United States, Australia and the UK because carriers are reluctant to absorb terminal charges they face when sending empties back to China. But now carriers are facing conflicting allegations: Some accuse carriers of slowing the return of containers by prioritizing space for paying loads – with the volume of those being insufficient to replenish container stock in China. At the same time, the U.S. maritime regulator is looking into whether carriers are unpacking inbound containers quickly and putting them back aboard departing ships before they can be loaded with U.S. farm products and other Asia-bound exports.

  • The problem is not confined to the China and the United States. Vietnam and Thailand also are experiencing container shortages. In the case of Vietnam, the situation is most severe at Ho Chi Minh City. Port congestion in Australia has contributed as peak shipping season approaches there.

  • Containers in Africa and South America often return to Asia indirectly — going first to Europe or the United States before heading back. Many of the containers in Africa and South America are smaller, 20-foot boxes. But the three-way traffic has been slow to resume.

  • Some containers were taken out of the normal cycle in the spring and early summer by U.S. importers using them for storage of goods – such as spring clothing lines – for which there was no demand or available storage space.

  • Months of port congestion on the U.S. West Coast and elsewhere has contributed to slow turnaround, along with importers who have ignored the normal 3-5 day turnaround times. Until now, many container owners have been reluctant to impose penalties on large importers that fail to return their boxes on time.

  • Operational disruptions and cost-cutting across the supply chain is affecting handling and is likely to drive up container-damage incidents and claims, insurer Allianz warns.





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