When will the CONTAINER SHORTAGE crisis END?

How serious the problem is?

The global transportation system is currently experiencing a unique and unexpected crisis.

The extraordinary cascade of events caused by the pandemic has led to a severe container shortage crisis.

The lack of containers in the right locations during the recovery phase had a massive impact on rates.

Transportation cost has increased from about $1,500 to $6,000-$9,000 per container.

The container shortage also drives up new containers’ prices, as manufacturers know the demand to charge extra. ($2,500 for a new container, up from $1,600)

container rental rates have grown by about 50 percent.

Companies are canceling the old low rates contracts with paying penalties to Ancash current opportunity

Reason for the crisis

1.  Due to a decrease in the number of available containers

2.  Secondly, since most of the ports were congested as they suffered from a reduction in labor.

3.  A drop in the number of ships operating

4.  Significant changes in consumer buying sentiment.

5.  Simultaneously the PMI (purchasing managers index) is on a 50 weeks’ high, as many consumers in the most developed parts of the world are working from home and restricted to go to their jobs.

6.  Increase in consumer consumption That has created a very strong demand for consumer-related products. Not only food – but also technical appliances like more computers, tv-sets, etc.

7.  Recent Suez canal blockage issue added to further problem

The law of Timing:  Last year Containers from Asia were sent to North America, but due to COVID-19 restrictions, almost nothing moved in the opposite direction. The shipping companies did not pay attention to empty containers’ returns. Already existing supply asymmetry has turned into a monstrous imbalance.

The catastrophic labor shortage in American ports. And it was not just about docks and warehouses. Due to border restrictions, the work of customs was also partially suspended.

Although China resumed exports earlier than the rest of the world, other countries faced and continue to face restrictions and labor cuts.

There is currently a massive 40 percent imbalance in North America. With trade between China and the United States averaging 900,000 TEU (20-foot equivalent unit) per month, the absolute container imbalance is genuinely enormous.

Growing congestion and container shortages going to major ports in China, Chinese officials call for cooperation to get more containers and lower shipping rates.

China already announced that it has taken steps to increase the supply of containers.

China Container Industry Association (CCIA) urged sea container manufacturers to increase their production dramatically.

What to expect in the future?

Reports from China point to improved activity in its ports in recent weeks.

Others in the shipping industry remain pessimistic about the coming months’ outlook.

Many people still believe that there will be no relief until next summer.

Numerous measures are currently being taken to break the deadlock, such as carriers’ attempts to reduce free time and detention periods, more efficient unloading systems, etc.

Contract freight rates are also forecast to remain high throughout the year. It is already clear that this year will be quite challenging for both trade and transport companies, and therefore for the world’s economy.

Shipping lines and Freight forwarders are the most benefited and it will be interesting to see how they will play to it…….

Therefore, All in all – We should expect a longer delivery time for the deliveries of goods and better to have an improved long terms planning!