Containers continue to be in short supply - particularly in the places where they’re needed most - with wait times varying region to region, country to country and port to port. And even the world’s biggest shipping lines are not sure when their containers will be available, or where.

Despite relationships going back decades, long-standing contracts and priority agreements, our ocean commercial team continue to face massive challenges in locating, booking and positioning the right container equipment, at the right place, at the required time, with particularly profound shortages across China.

Whatever challenges they face, Emma Hulbert and her team, always get the equipment that is needed, or find alternatives to work around the problem.

The continuing shortage of shipping containers is a symptom of the havoc wreaked by the COVID pandemic on global supply chains.

The problem isn’t that there are not enough containers, it’s that the containers are in the wrong places, with stacks of containers in areas where they really shouldn’t be as they cannot be loaded with products due to the imbalance of trade.

When the initial outbreak of COVID-19 forced China into national lockdowns at the end of 2019, the region’s manufacturing sector shut down and cargo ships that were already en route out of Asia dropped off hundreds of thousands of containers full of goods, but because of pandemic restrictions, those containers were not re-loaded with exports to send back to Asia. Instead, the containers simply piled up at ports and inland terminals.

Unable to spend their money on restaurants, pubs and entertainment, consumers turned to buying manufactured goods and the massive upturn in demand that began late in 2020 meant that origin and destinations ports struggled to load and unload containers fast enough to keep up with the queues of ships anchored offshore. 

Many ships, already running behind schedule because of congestion at the ports, decided to leave their empty containers behind rather than wait days to load them back onboard. Or they simply did not call at the ports intended as they were omitting them from their schedules.

As containers continued to pile up at import ports across the UK, Europe and the US, their supply dwindled at major export hubs across Asia.

Despite factories ramping up container production activity at the end of last year and beginning of this year, inventories of new containers remain very low and it is unlikely that the shipping lines will be able to end the shortage by simply making more containers.

The shipping lines’ expectation is that the container shortage will sort itself out over time, and bottlenecks will be relieved as buying patterns return to normal. Additional vessels and containers are entering the market in 2021, which will also help to alleviate the issue.

How long that will take to unwind is unfortunately a guess and we are working to the assumption that the shortages will be resolved sometime towards the end of this year or early next year.

But of course any assumption for how the shortage will end can be undone in an instant, if we have another ‘Suez’ or ‘Yantian’ incident.

While shortages remain, locating and booking equipment is particularly challenging, which is why we request four weeks visibility and booking window from vendors and shippers, to secure space on the vessel and get the right equipment positioned.

Global supply chains are likely to be under intense and sustained pressure for some time yet and we will continue to share with you the most important developments, so that you are informed and prepared to make critical decisions, ahead of potential issues. 

Please contact Elliot Carlile or Grant Liddell to learn how we can support your supply chains, even in the most challenging market conditions.

There cannot have been many weeks when we were either warning of impending rate increases, highlighting recent increases, or explaining why further rises were likely. And while we have protected our customers from the worst excesses of the lines, this article by Mike Wackett for The Loadstar lays bare the stark reality for some shippers.

In normal times we would report positive market intelligence and the latest news, but those opportunities are less than sparse currently, so here is another dose of the real market as reported in the trade press....unfortunately.

'I paid ridiculous charges, my cargo still got rolled and the carrier wanted more'

Short-term freight rates from China to North Europe have breached the $20,000 per 40ft mark, while transpacific carriers are quoting rates of up to $25,000 to the US west coast.

And there was one report of $32,000 from Shanghai to Los Angeles being quoted this week.

The Loadstar has seen several quotes from the top five carriers of $21,000 per 40ft for July shipments from Chinese ports to Felixstowe and Southampton, with the average at around $18,000.

Although these massively elevated rates include a premium fee, to guarantee equipment and space, some shippers complain that their cargo is still getting rolled.

“We paid their ridiculous charges and thought that was the end of it,” said one, “but then we found out from our local agent that the boxes were still on the quay and the line wanted more to ship the cargo.

“Apparently, there was another FAK hike from the next vessel which they insisted on charging, which means their so-called premium fees are worth nothing,” he added.

And as the peak season approaches, it appears the situation is about to get even worse for shippers to Europe and the US.

They will need to brace themselves for another round of FAK and GRI rate hikes on the 1st July, with yet another hike likely from the middle of the month and a PSS [peak season surcharge] of several thousand dollars.

One UK-based NVOCC told The Loadstar this week that a “curt email” from his carrier advising of a new increase was “the final straw”.

He said: “We have supported them through thick and thin, even when their standing was pretty low in the industry, and this is how we get repaid.”

On the transpacific, shippers are suffering similar problems. Jon Monroe, of Jon Monroe Consulting, said carriers had the ability to “manage rates” by rolling cargo, suggesting that the US Shipping Act needed to be updated to include a cap on rate increases and a both-parties damages clause for non-fulfilment of contract.

Meanwhile, Craig Grossgart, confirmed to The Loadstar that one shipper had been quoted $32,000 this week for the shipment of a 40ft container from Shanghai to Los Angeles.

“To be honest, I think it was a polite way of the carrier saying to the customer it doesn’t want to take its business,” said Mr Grossgart.

Nevertheless, he said a figure of $25,000 per 40ft had been quoted to a shipper that needed to move 300 containers from Shanghai and Yantian to Los Angeles next month – “and that is a serious offer”.

With the addition of premium fees, plus a raft of other charges, the gap between the spot market indices and the actual rate being paid is widening by the week.

For example, the North Europe component of today’s Freightos Baltic Index stood at $11,006 per 40ft, while the FBX reading for the US west coast was $6,588.

With strong demand for space and limited capacity likely to extend into next year, we continue to encourage shippers to contact us for all options available which may include the spot market and protect themselves with tailored and specific alternatives, rather than face rates that have risen over 50% in two months and are likely to rise even higher than the current record level, as we enter the traditional peak season for ocean and air freight.

If you have outstanding orders in Asia and are waiting for rates to fall, all the indications are that you will have a very long wait. Certainly up to Lunar New Year 2022 and possibly even after that, which is why we would recommend booking at the earliest opportunity, despite the current high rates. Definitely don’t try to play the market. 

Forecasting continues to be a key ingredient to successful supply chains in the current market and are now needed months ahead of despatch, and not weeks or days as we used to ‘enjoy’. We can only manage cargo movements and your expectations, if we can see them ahead, especially during the critical busy last six months of the year.

Please contact us immediately to receive further updates on a rapidly changing logistics market and arrange a review and discussion on how we can further enhance the movement of your products to market or manufacturing locations globally.