With the arrival of the peak shipping season in Europe and the United States, the global container crisis continues to intensify this summer – due to the mismatch of market capacity and the tension of port workers, The global trade field is obviously filled with a large number of idle containers, but import and export companies have stated that it is more difficult than ever to find available containers.
As demand surges from businesses to restock, coupled with a series of shipping disruptions that have left thousands of containers stranded at sea, some near major ports There was a long queue of ships entering the port. According to statistics from container shipping platform Seaexplorer, as of August 2, 120 ports around the world have reported congestion, and 360 ships are waiting to berth at ports around the world.
At the same time, more goods are being piled up in inland freight centers in the United States, Europe and Asia. Due to manpower shortages, companies have become increasingly overwhelmed. It is struggling to cope with its overwhelmed logistics business.
As Tim Boyle, CEO of Columbia Sportswear, an American outdoor sporting goods manufacturer, pointed out in a recent earnings call, the above factors have led to a decline in the global container sector. The result of the mismatch is that shipping costs for companies have soared, making it increasingly difficult to meet the pace of recovering consumer demand.
Global container chaos
Marine shipping containers have now become an indispensable and critical link in the long global supply chain. It is thanks to container transportation that the global trade field has the ability to effectively handle the transportation of large quantities of consumer goods, clothing, parts and other raw materials. Ability. But in this year’s shipping market, although many parts of the world seem to be flooded with a large number of containers, and the production of containers is expected to reach a record level this year, companies are still complaining that it is difficult to find a container.
Container factories, almost entirely concentrated in China, are expected to produce 5.4 million 20-foot-equivalent units this year, a record high, according to Drewry Shipping Consultants Ltd. Nearly double the 2.8 million produced in 2019.
“Theoretically, there are a sufficient number of containers in the market to handle global trade. However, in reality, due to the large number of containers being stuck In the wrong place, this has caused container supply in many places to become very tight,” said John Fossey, director of container equipment and leasing research at Drewry. The chaos caused by the epidemic is the main factor hindering the supply chain.
Lars Jensen of Danish shipping consultancy Vespucci Maritime pointed out that the source of the container shortage can be traced back to the early months of the epidemic in the spring of 2020, when consumer demand The decline has seen many shipping lines cancel routes across Asia and North America. As consumer demand picked up last summer, thousands of empty containers were stranded in the United States, and Chinese exporters had to face lengthy waiting periods to find containers to ship their goods.
In addition, a stranded container ship blocked the Suez Canal in March this year, and Shenzhen Yantian Port, one of the world’s busiest ports, was closed for a time in May and June. Some facilities were closed, resulting in about 350,000 containers being idle, and there was a large backlog in ports in the United States and Europe. These events have intensified the pressure on the shipping market.
According to the China Container Industry Association, the global epidemic has led to serious stranding of overseas empty containers, reducing container turnover efficiency. Currently, only one out of every three exported containers can be returned, and a large number of empty containers are backlogged in the United States, Europe, Oceania and other places, significantly affecting container turnover efficiency.
Huachuang Securities also pointed out in a research report last month that the current supply chain bottleneck in the container shipping market originated from the shortage of ships and containers since the third quarter of last year. A progressive supply and demand mismatch caused by the shortage of labor in collection and distribution. Nowadays, the problems of container shortage and port congestion in certain links should no longer be looked at in isolation, but rather the systemic problem of slowed turnover efficiency in most supply chain links.
It is hard for companies to find a container
The World Container Index (WCI) shows that a 40-foot The spot price of containers from Shanghai to Los Angeles has now exceeded $10,000.
Flexport, an American freight forwarding company, said that the transportation time from Shanghai to Chicago via the ports of Los Angeles and Long Beach has increased from 35 days to 73 days. This means that it takes more than 140 days for a container to depart from the port of origin and return to the port of origin, which is equivalent to a 50% reduction in the available shipping capacity on the market.
The tight supply chain is undoubtedly very painful for import and export traders. In Asia, since most goods are exported by sea, many exporters have recently complained that container prices have soared 4-5 times, and it is impossible to book containers without 1-3 weeks in advance.
Across the ocean in the United States, traders also face challenges. 1�U.S. exporters say that many shipping companies are currently refusing to transport containers inland to pick up goods as they try to ship empty containers back to Asia as quickly as possible to take advantage of historically high freight rates for goods exported from Asia.
Currently, it costs more than seven times as much for a cargo ship to transport a container from Asia to the United States as it does for the return trip. That price differential has widened dramatically since the outbreak began, according to S&P Global Platts. Therefore, it is now more profitable for shipping lines to quickly return to Asia with empty containers to load, rather than waiting for those containers to be filled with U.S. exports before setting off.
A comparison of data shows that in the past, about two-thirds of the containers leaving the Port of Los Angeles were filled with export goods. More than three-quarters were empty.
Although the port’s loaded import volume reached 467,763 TEUs in June this year, a year-on-year increase of 27%. However, loaded export volume fell by 12% compared with the same period last year, to 96,067 TEUs. This is the lowest export volume from the Port of Los Angeles since 2005. The number of empty containers climbed to 312,600 TEUs, a year-on-year increase of 47%.
In addition, those full cargo containers destined for the interior of the United States may also face the challenge of congested rail networks and a shortage of truck drivers and warehouse workers to load and unload cargo. , which became another congestion point for stuck containers.
Trucking company Schneider National Inc. said its customers who use containers saw their “average unloading dwell time” increase by 70% in the second quarter compared with the same period in 2019 due to a shortage of workers to handle the containers. %.
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