SHORTAGE OF CONTAINERS: CAUSE & EFFECT
Recent reports reveal a severe shortage of containers. The shortage is caused by several factors, “Chinese officials cited a surge in China’s exports, COVID-19 pandemic's impact on production in countries around the world and the low turnaround rate of containers from abroad as the causes for the increased demand for containers.” Officials also noted that it is the peak season for exports to Europe and the United States, which is also contributing to the shortage of containers.
Further research to find more reasons behind the shortage guide us to uncover a survey by Container xChange, which in association with German maritime research consultant FraunhoferCML, suggests that “despite technological advances, containers still spend a surprisingly long time empty at depots, incurring storage costs and not earning revenue.” Indeed, containers are spending 45 days empty in depots instead of in use.
The impacts of the shortage in container supply are mostly service level-related and more recently, financial. Active container demand in the U.S. is having implications for global container shipping costs. After mid-November, shipping rates have been increasing despite the reluctance of shipping companies to increase shipping rates. Companies have been forced to start using containers that were ready for disposing to make up for the shortage. Also, many companies around the globe are facing logistics issues due to their inability to book containers.
In response to this tense situation, China container manufacturers are working hard to ease current demand conditions. Manufacturers have extended their production schedules to speed things up.
By: Marie Lou Mella
December 5, 2020