Container Shortage – The Reasons Behind It
Since the beginning of 2020 and the outbreak of COVID-19, the global shortage of shipping containers has become a hot topic. As mentioned in our September article, COVID-19-Caused Capacity Cuts Could Become Permanent, before the pandemic, experts anticipated a positive growth rate in the container industry through 2024. Unfortunately, now experts are anticipating a negative growth rate, predicting even greater uncertainty in the years to come. To make matters worse, now there is a noticeable lack of 40-foot containers. In fact, many ships are being forced to sail away from overstocked ports under-utilized.
With goods not making it to destinations with quick turnaround times, many companies and suppliers worldwide are left wondering why a shipping container shortage is occurring.
A Look into China
There are a few things at play here. First, during the height of the pandemic, there was a sharp decline in the demand for containers. Ports were forced to shut down and hold goods. Now, as ports begin to sporadically reopen, the demand to ship from places like China and the US is at its highest. Second, not all of the vital containers are able to make their way back to China because they are stuck in ports around the world. Many essential empty containers are backlogged in depots that are still restricted, particularly in the UK. Even with technology advances, typically turnaround time for an empty container is weeks, clearly not supporting the demand increase.
This all has resulted in a container price surge. As China is a leading export country, companies there are prepared to pay higher container rates to expedite the equipment return. This means, after containers have arrived at their destination, they are sent back to China quickly. Dramatically affecting the typical supply chain runs, while China competes against time to empty their stockpiled ports, this leaves the rest of the world empty handed in container supply.
Although China’s Ministry of Commerce recently stated that they will work to help equalize the distribution of containers worldwide, the impact that COVID-19 had on the supply chain will be hard to overcome. In response to this understanding, many shippers are working with 20-foot units and urging manufacturers to increase container production.
Flexibility Is Key
In these times, it is important to think creatively while staying flexible. Utilization of reefer containers as well as 45-foot containers could become vital in the months to come. Although these times are uncertain, you can count on Clearfreight to help manage your logistics. Contact one of our experts today to discuss your supply chain needs.