Global container imbalance

There has been a lot of disturbance in container shipping all over the world in recent months.

Global container imbalance is currently an issue because of the worldwide impact of the coronavirus pandemic on every link in the supply chain. Disruptions in manufacturing and a disparity in imports and exports have exacerbated container imbalance.

In February there were 40 containers awaiting a berth at the twin ports of Los Angeles and Long Beach due to traffic. Combined volumes at the terminals hit a record of 1.9 million containers in May, nearly double the number in March 2020.

Then the Ever Given got stuck in the Suez Canal for nearly a week delaying hundreds of ships on their way between Asia and Europe. Next, the Covid outbreak in Yantian port slowed down ship loading and disturbed schedules for entire month.

The factors that have driven Asia- Europe container rates to record levels aren\’t simply a temporary coordination problem. Returning to normality could take years.

Part of the problem has been that containers aren\’t in the right places. In global terms trade experienced a short and sharp pandemic. By September 2020 volumes were already running ahead of their usual levels, as demand for medical equipment and spending on durable goods picked up in Western countries.

Trying to make all those deliveries on time meant that many vessels started making their journeys empty back to the Far East, which resulted in excessive numbers of containers in European and North American ports and a shortage in Asia, pushing freight rates to astronomical levels on routes from Asia. The deficit is mainly in 40-foot boxes, and many carriers are restricting the release of empty containers before they’re scheduled for shipment.

Those high prices — and the sharp differentials with the cost on the return route — can be seen as price signals that will push the industry to rebalance itself. That already seems to be having an effect. More than 360,000 empty containers were shipped from the port of Los Angeles in May, roughly double usual seasonal rates.

In the past, shipping lines might have been able to relieve the pressure by ordering their vessels to travel faster, increasing the capacity of the fleet by working it harder. Even that option is less available, though: The latest generation of mega-vessels save energy and costs by having top speeds of around 18 or 19 knots as opposed to 24 knots in the 2000s.

Now more than ever, communication throughout the supply chain is vital. You’ll want as much visibility as possible into container availability so that you can incorporate that data into your strategic planning and maximize efficiency in your supply chain.

Source:

https://www.bloombergquint.com/view/chaos-in-container-shipping-goes-beyond-the-suez-fiasco-and-backed-up-ports

http://www.globeconfreight.com/blog/need-know-global-container-imbalance/

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