The world has been in container shortage over the last few months. Following the reopening of the US and Europe economies after coronavirus lockdown around July – August, the demand for e-commerce merchandise and medical supplies has been surging so high and fast.
At the same time, productivity is at a very low level because of the strict rules of social distancing. This results in longer than normal time of container stays on its chassis. Slow workflow due to Covid restrictions, makes the dwelling time longer than it should be. These seem like the root of the problem, well besides the fact that this is all caused by the virus.
As we all know that China recovered first from the virus while many other countries are still in lockdown. Carriers served the US and Europe zone for the medical supplies demand, but they also withdrew the amount of space capacity to anticipated the weak demand. Because of this, many containers are left empty at Europe ports.
Sudden High Demand after Lockdowns
After the lockdowns opened, many countries started to adapt the new normal and the demand of e-commerce is begin to high. Carriers then forced to serve the sudden high demand and moved their vessels to Asian ports. But due to the booming of trans-pacific market, carriers were focusing more to China ports and used all available equipment.
This is when the container shortage begins. All containers are used to serve the surging demand of trans-pacific while there are many empty containers stranded at UK & Europe ports which seem like the wrong side of the supply chain.
This imbalance causes things to go awry. Carriers face difficulties in repositioning empty containers while their vessels are focusing on the trans-pacific zone which right now at the point of containers shortage because all have been fully equipped. General rate increase during peak season is common but this time is spiking like never before.
According to one of our source at shipping company, the rate spikes even more than 200%. The situation is getting messier with the upcoming Christmas and New Year’s holiday. All ports in China are fully loaded and vessel’s capacity is up for grabs.
All compete to get the space and their cargo onboard before the holiday. One of our sources said that carriers in China even already apply cancelation fee up to Usd 500.00 per 20 feet. Container shortage is now spreading throughout all Asia main ports and it gets worse in India.
Many transshipment hubs in Asia including Singapore, Port Kelang and Tanjung Pelepas are now chaotic. A long queues of containers waiting for the vessels to arrive with the uncertainty of the available space. Some say that the wait can be almost a month. Some carriers are even forced to reject reservations due to full space.
The long dwelling time means delay and delay means extra handling charges, storage, maintenance fees, inland transportation and sea freight which ultimately goes down to the consumer level. The global supply chain is now falling at the critical time of this peak season. Some says that the situation will get worse until Chinese New Year. Now let us all hope that the pandemic will be over soon!