Why is there a Container Shortage in the Shipping Industry?
2020 has been quite a year. Since the start, trade activities have been disrupted. Now, as the year is gradually coming to a close, we are seeing an extremely high demand for containers. This has had two major impacts – container shortages and a spike in the international freight rates. Let us briefly examine the reasons behind this major problem of container shortage faced by the shipping and logistics industry in 2020.
Now, if I were to tell you in one word why we are facing such an issue, the answer would be “COVID-19”. This global pandemic, coupled with an unexpected demand for delivery, has affected the supply of containers. According to the industry experts, now exporters have to wait over a week for access as compared to the 2-day wait periods earlier.
The limited availability of containers is one of the major reasons behind the unprecedented surge in sea freight rates in the second half of this year. The other factors that affected the prices are listed below:
- Strong demand to restock the inventory in North America and Europe.
- The hurry to transport goods and cargo ahead of the Chinese holiday, “golden week.”
- Carriers tightening capacity due to the coronavirus pandemic.
The shortage of containers is not limited to one country. It is a global issue as containers are part of the global trade cycle. A few other factors that have contributed to the container shortage are:
- The transhipment ports of Colombo are congested. This is adding to the lead time. Further delays are caused by the congestion of the US railroad system.
- As vessels are being quarantined and additional checks are conducted on Chinese shipments, the issue has worsened.
- When countries entered lockdown from March to April 2020, very few containers were cleared as outside activities were restricted during that period which exacerbated the issue.
- Besides these, technical glitches that may occur in the clearance procedure implemented by the customs officials may make things worse.
- As the number of vessels was reduced by the shipping line, empty containers could not be collected.
- Lack of manpower and a limited number of chassis.
To solve the problem of container shortages, shipping lines have cut down free time and detention period.
As China was able to manage the spread of COVID-19, restart the factory production of goods and open up exports before the rest of the world, more businesses came forward to produce goods in China. This led to a massive increase in exports from China.
In August of 2020, container production in China increased by more than 61% (compared to last year). Therefore, China is not facing any shortages despite being a manufacturing hub that exports a lot of goods.
Clarion Shipping Services is illustrious in the world of logistics. As a frontrunner in the freight forwarding industry in the UAE, we are backed by an experience of two and a half decades. We proficiently provide tailor-made solutions that suit the goals and needs of your company.
If you want to make cargo bookings, please do so as early as possible. Due to the global shortage of containers, it is difficult to cater to last-minute bookings. To request a quote, visit www.clarionshipping.com