The current container shortage in the logistic industry impacts manufacturers, retail businesses, and trading companies worldwide. When shipping transportation slows down it creates a problem for supply chains and getting goods into the hands of consumers. Plus in our industry, it leads to fewer quality containers available for customers to repurpose. Today, we explain the serious container shortage, and when experts believe we’ll see it come to an end.
The Cause of the Container Shortage
You guessed it; the global pandemic of COVID-19 is the main cause of the current container shortage. From the beginning of 2020, coronavirus has gripped the world and life as we know it. In March and April 2020, many countries entered lockdown to help protect their population. This severely limited economic activity and ports were closed or hours for laborers were reduced to address the change in demand.
Due to the pandemic, some factories even temporarily closed which caused a large number of containers to be stopped at port awaiting shipment. Limited shipping lines reduced the number of ships and the movement of cargo. Many shipping companies would take on massive losses if they continued to send vessels with little cargo on board. The shortage of shipping containers is also impacted by the rebound in economic activities in China and other parts of Asia, and peak period demand for goods in the US and European markets, but slowdowns at port.
For those in search of container rentals or units to buy and modify, fewer ships in transit and logistical bottlenecks means fewer containers to be decommissioned and resold to companies like ours.
Freight from many countries was limited starting in April 2020 and began to recover in July. As the virus began in China, they were able to begin recovery efforts at an earlier stage. The government also provided funding for factories there to recover their production. This helped to increase exports from China and helped to reinvigorate supply chains around the world.
Global demand for Chinese goods (such as PPE and computers to work-from-home) has been so strong it’s creating a shortage of containers and driving up shipping costs, potentially impeding future exports. However, imports aren’t keeping up with their exports. An uneven trade flow is resulting in a lack of containers available to be refilled and reshipped.
Normally, beginning in September more cargo containers are transported to North America for larger volumes of business inventory needed for the Christmas holiday and New Years’ sales seasons. Approximately 900,000 20-foot containers are sent monthly to keep up with our usual demand.
The slow return of containers from American ports isn’t helping the issue, as many liners do not want to or can’t afford to bring back empty containers to Asia. Shipping freight rates are up about 400%. These higher costs for importers and exporters, we’re sure ultimately be passed on to the consumers only further shrinking demand for some items.
Congestion at Shipping Ports
It’s not just the reduction in cargo containers being shipped, but the shipping lines are also reducing free time and attention. Some shipping lines in Japan reduced free time from 14 to 7 days to quickly collect containers and keep cargo moving. This however was offset by chassis and a lack of manpower here in the states due to coronavirus regulations.
The manpower problem didn’t stop at port during the coronavirus. Once they arrive at ports in California, containers are collected and brought inland; more delays were caused by a shortage of drivers to help shipping containers to return quickly. The lack of chassis to collect cargo containers stopped at port is leading to extreme congestion. Now the problem isn’t that there’s no business, it’s that there are no containers. When logistics companies aren’t able to work efficiently, we all feel the impact on our supply chain and daily lives.
When Will the Shipping Container Shortage End?
There is no easy solution to this global container shortage. This is the first time that we’ve encountered this limitation on all sides of container transportation. We are in unchartered territory and therefore it’s difficult to forecast when the lack of containers will come to an end.
It takes months and in some cases years to plan shipping routes. Bringing in a ship is very expensive. Soaring shipping costs also are currently reducing the number of goods and therefore containers in transit. Companies have to ask themselves ‘how do I bring my ships to port if the place of origin has no cargo?’ and ‘what will I do if there are no drivers available to help distribute what we do have?’
Currently, logistics experts are hopeful that we’ll see a return to our standard shipping early this year in late February or March. However, should numbers of those with the Coronavirus go on the rise, then the demand for day-to-day goods may reduce again limiting exports and our shipping lines. There is another usual shutdown for the Lunar New Year (which starts in early February this year) which could also worsen current bottlenecks and push things back later in 2021.
Only time will tell the true impact of how steel shipping container logistics will bounce back.