CONTAINER SHORTAGE

The container shortage and either Chinese ports working at lower capacity or closing due to covid 19 have resulted in further congestion. Reduced manpower in terminals, port congestion as well as equipment and transport constraints worldwide have further exacerbated the capacity constraints and cargo delays. Other contributing factors to the extended transit times being experienced include carrier scheduling, the deterioration of vessel berth waiting times, service changes and blank sailings.

The congestion being experienced at ports worldwide has caused a lengthening turnaround time of containers, fewer empty containers picked up whilst other containers are being left at inland depots.

As freight rates increase exponentially by 300 – 500% in what was once a stable zone has caused India to experience a decrease in the export of products across multiple platforms as a direct result of the global container shortage and the escalation in freight rates which has resulted in government intervention. The increase in the accessibility of the global market has resulted in an increase in online purchases and the knock-on effect of an increase in the movement of goods and cargo has resulted in bigger call sizes and cargo volumes.

The huge demand for containers in both the U.S. and Europe have also resulted in the compounding of container rates. These rates have increased from $3 000 - $4 000 to as much as $7 000 - $10 000 in just 6 – 8 months. These rates increase have caused a runaway demand instigating a shortage of vessels. All available ships that are currently available in the market are deployed to meet demand and maximise profit whilst demand is high.

The fact that certain countries are willing to pay premium rates for empty containers has exacerbated the container shortage in other countries, this has resulted in countries such as India limiting the number of empty containers allowed to be exported for at least a 3-month period.

This has resulted in a call for shipping lines to stop offering priority bookings at higher rates and revert to a first serve basis when taking bookings has also been made.

In addition, the high demand for both imports and exports to the U.S. has seen a growth of L.C.L. containers. The increased growth in the imports and exports markets cargo volumes is set to continue. The flexibility of services, cargo routings and loadings have contributed to a growth in opportunities to move L.C.L. cargo expediently. Transhipment has further assisted in the movement of cargo. Growth in less traditional L.C.L. markets has also been predicted due to capacity constraints in the high growth market and its resultant challenges.

International trade has recovered faster than anticipated and this has been a cause for the exponential increase in rates. The delays in shipments because of congestion and container shortages has caused liquidity concerns as shipments that previously took 45 days are now taking 75 – 90 days.

The diversification of sourcing to simplify supply chains will be a further long-term result of the capacity shortage and cargo bottlenecks to prevent the slowing of economic growth and an increase in costs for imports and exports which would place pressure on employment.