Where have all the sea containers gone?


The shipping container that has been the cornerstone of global trade growth is emerging as the latest source of frustration for importers and exporters facing global supply chain disruptions.

Steel crates are harder than ever to find as growing demand for inventory replenishment and a series of shipping disruptions have left several thousand containers stranded at sea on ships anchored near stranded ports. Still others are cramming into domestic freight hubs in the United States, Europe and Asia as companies struggle to cope with the flow of goods that has sometimes overwhelmed their operations.

The result is what Tim Boyle, managing director of Columbia Sportswear Co., on a recent earnings conference call, called a “container dislocation” that helped skyrocket costs and complicated the effort. to meet growing consumer demand.

Containers are essential equipment for global commerce, providing the ability to efficiently handle large volumes of consumer goods, clothing, manufacturing parts and other materials across today’s long supply chains. .

Boxes are scarce, although much of the world appears to be inundated with shipping containers and box production is expected to hit record levels this year.

Container factories, concentrated almost exclusively in China, are expected to produce a record 5.4 million 20-foot equivalent units, or TEUs, of steel crates this year, according to Drewry Shipping Consultants Ltd. Production has grown rapidly from 2.8 million TEUs. were produced in 2019, as part of a decline in orders over several years amid economic uncertainty and slowing global trade growth.

John Fossey, head of container equipment research and leasing for London-based Drewry, said in principle there are more than enough containers to handle global trade volumes. In practice, he said, availability in several parts of the world has become incredibly tight as large volumes of containers are stuck in the wrong place.

Mr Fossey said the decline in production in recent years may have contributed to the current shortages, but the disruption triggered by the pandemic has been the main factor hampering availability.

Lars Jensen, of Vespucci Maritime, a Denmark-based shipping consultant, traces the onset of the container shortage to the early months of the pandemic, in the spring of 2020, when consumer demand collapsed and shipping companies collapsed. canceled many of their routes between Asia and North America. As consumer demand picked up in the summer of 2020, thousands of empty containers got stuck in the United States and exporters in China had to wait a long time for the boxes to ship their goods.

Events such as the blockage of a stranded container ship on the Suez Canal in March, the closure of a key southern Chinese port in May and June that left some 350,000 unused containers and large backups in American and European ports have added to the tensions.

Images showed the Ever Given, the container ship that blocked the Suez Canal in March, again in motion in early July. The owner and Egyptian authorities have reached a multi-million dollar deal for his release, ending a months-long saga on a critical global trade route. Photo: Mahmoud Khaled / AFP / Getty Images

Today, some US exporters claim that shipping companies refuse to send boxes inland to collect their cargo, as they try to get empty containers back to factories in Asia as quickly as possible in order to take advantage of the historically high shipping prices for mainland exports.

Peter Friedmann, executive director of the Agriculture Transportation Coalition, said a survey of members conducted in the fall showed 22% of sales are lost because they cannot transport goods overseas.

For loaded containers that are sent inland, congestion on rail networks and a shortage of chassis for trucks, drivers and warehouse workers have resulted in important safeguards at freight facilities as companies find it difficult to unpack the boxes and put them back into circulation.

A shipping container at the Behala inland port in Berlin in January. Congestion, along with labor and equipment shortages have contributed to a significant mismatch between where containers are located and where they are needed.


Photo:

Liesa Johannssen-Koppitz / Bloomberg News

Union Pacific Freight Railways Corp.

and BNSF Railway recently restricted the movement of shipping containers from West Coast ports to Chicago to give them time to empty the stacks of containers that had accumulated at the Midwestern shipping hub.

Schneider National heavy load transporter Inc.

said the “average dwell time on unloading” for its customers using containers increased by 70% in the second quarter compared to the same period in 2019 due to a shortage of workers to handle boxes. The company has added approximately 1,000 containers to its network, and CEO Mark Rourke said on a July 29 earnings conference call that it would “bend our network to prioritize shippers and to recipients who most efficiently and efficiently unload and return »containers and trucks. frame.

The constraints on the availability of equipment attract the attention of regulators. Carl Bentzel, a member of the Federal Maritime Commission, recently raised concerns about the reliance of US exporters on Chinese-made containers and truck frames.

Congestion and delays have increased the time it takes for a container to travel from Beijing to Chicago to over 70 days, from around 30 days, Bentzel said.

However, there doesn’t appear to be much that regulators can do in the short term to make more containers available, and industry executives and experts say tensions on supply chains are expected to last until the end of the year, offering little hope of relief for shippers.

Ken O’Brien, president of Gemini Shippers Group, a New York-based cooperative that represents more than 250 companies that buy space on ships, said it was strange there wasn’t a stack of containers waiting to be picked up. “You always thought they were there, and now it’s really a melee operation,” he said.

Write to Paul Berger at [email protected]

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