Shipping container shortage fuels shipping disruptions and threatens supply chain security
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Everything from cars to Christmas gifts could be delayed due to a global shipping container shortage.
According to a recent Forbes article, the cost of new shipping containers has skyrocketed more than 500% recently and even if you’re willing to pay the inflated price, delivery of the new container is still delayed. What happened to all of the containers in circulation and how will this shortage impact global economies and consumers?
The pandemic and production pullbacks are two major factors contributing to the container shortage. Consumer demand slowed in the spring of 2020 causing shipping companies to cancel routes between Asia and North America, spurring a pullback in production of new containers. When demand returned in the summer of 2020, a high number of empty containers were left stranded in the United States and new containers were in short supply due to production cuts.
Exporters in China are still managing the long wait for containers. COVID protocols also slowed down port services and activities making unloading vessels a top priority. This protocol change left many empty containers sitting at ports and reloading them onto a vessel was a low priority at many US ports.
The recent blockage of the Suez Canal also complicated the flow of containers around shipping routes. This situation was further exacerbated by the recent shutdown of Southern China’s Yantian Port due to a COVID outbreak. This closure stranded 350,000 loaded containers at the port.
The steel boxes are also falling off of vessels mid-voyage, accounting for about 3000 lost containers in 2020. Other incidents, like the docking collision that occurred at the Port of Kaohsiung on June 3rd causing two cranes to collapse and sending containers toppling, slowed down port processes in Taiwan for months.
Look for transit times to continue to grow as delays at destination ports also increase. Longer transit times are indicative of delays at destination ports as vessels aren’t in a rush to arrive at a port that doesn’t have availability for them to enter.
Our data shows these longer transit times from East Asia to the Western United States. Note the drastic increase in transit times from mid-July through to August 2021.
Our data shows the time a vessel is spending at the Port of Rotterdam, Long Beach, and Los Angeles. All three ports show an increase in the time a vessel is spending in port. This increase in time spent at port causes a decrease in the number of vessels accessing the port each day. This decrease means fewer items are unloaded and a slow down in goods moving through the port.