Confronting the Container Imbalance
Procurement managers, technical directors, and purchasing agents are feeling it in high prices and long delays: As the global economy surges back to life, a massive imbalance in shipping container traffic is exacerbating bottlenecks in the supply chain.
Container bookings are hard to find. Delays are long, with many shippers waiting 6-8 weeks for a container. Prices are high: often 3-5 times normal rates, according to Alex Durante, global sales director at Horizon Air Freight. And air freight alternatives are even more expensive.
The container imbalance is impacting all sectors of the global economy. It contributes to inflation, which is on the rise, reducing consumer buying power in the midst of persistent shortages of key consumer goods. Small and medium enterprises are priced out of global trade by the high costs of shipping. Time-sensitive shipments of food are stuck in home ports. Even recovery from wildfires in the U.S. West is slower and more expensive because of the rising costs of building supplies.
What’s Causing the Container Imbalance?
In the early days of the COVID-19 pandemic, countries around the world went into lockdown. Many factories shut down, reducing supply. Simultaneously, demand for many consumer and business products plummeted.
With many ports closed and crewing complicated by public health restrictions, shipping companies took many container ships offline to wait out the crisis. This left empty back-haul containers stranded, with no ships available to collect and return them to net exporting countries such as China.
Over the past year, as the global economy has come back to life, recovery has been uneven. Many countries in Asia came out of lockdown first but found themselves with a shortage of head-haul containers for export, while continuing restrictions in Europe and the Americas stranded back-haul containers.
With restrictions now loosened, demand in the Americas has rebounded strongly in recent months, amplifying the historic trade imbalance between Asia and the Americas.
This has all prompted aggressive measures by Asian exporters to retrieve any available containers, placing other regions in competition for an insufficient supply.
Throughout the global shipping network, port congestion caused in part by staffing shortages and lockdown regulations continues to further delay any attempt to rebalance container supply.
