Why did the price of empty shipping containers increased significantly during the COVID-19 pandemic?

The price of empty shipping containers has increased significantly during the COVID-19 pandemic due to a number of factors.

One major cause is the disruption to global supply chains. With lockdowns and other measures in place to slow the spread of the virus, many factories and ports were forced to close or operate at reduced capacity. This led to delays in the production and shipment of goods, causing a backlog of containers at ports around the world. As a result, the demand for empty containers to move these goods increased sharply, driving up their price.

Another factor contributing to the price increase is the imbalance between the supply and demand of empty containers. With many factories closed, the production of new containers has slowed, while at the same time, the demand for them has risen due to the backlog of goods waiting to be shipped. This has led to a shortage of empty containers, which has pushed prices higher.

Another cause is the increased freight rates as shipping companies struggled to meet the surge in demand. The shipping lines faced delays and operational challenges, they had to increase freight rates to cover the extra costs. This increase in freight rates led to higher prices for the empty containers, making it more profitable for shippers to hold on to their containers instead of returning them.

Real life examples of this can be seen in the port of Los Angeles and Long Beach, which are two of the busiest ports in the world. As of October 2020, the ports have reported congestion and delays due to the impacts of the pandemic, causing a shortage of empty containers and driving up their prices. Many retailers and manufacturers have been affected by these delays, with some reporting delays of several weeks or more in receiving their goods.

In China, where most of the containers are produced, the cost for production and transportation of a new container has skyrocketed due to the rising cost of raw materials, the labor shortage, and the disruption in the supply chain caused by the pandemic.

In conclusion, the COVID-19 pandemic has caused significant disruptions to global supply chains, leading to delays in the production and shipment of goods, and a shortage of empty shipping containers. The resulting increase in demand for empty containers, along with the decrease in supply, has driven prices to record highs. The increased freight rates, caused by the disruption to shipping companies, also added to the problem. These conditions have affected many businesses, from retailers and manufacturers to shipping companies and container suppliers.