A shipping container shortage is snarling global trade
New York, NEW YORK — Shipping containers are the lifeblood of world trade: Virtually every product and part that circulates through the global economy travels across the seas, railroads, and highways ensconced in their corrugated metal embrace. But lately, those all-important containers are in short supply in the places where they’re needed most.
Indian exporters to North America and Europe are complaining that the wait times to find a shipping container can stretch as long as three weeks. British exporters say the shortage has delayed shipments to east Asia for up to two months. And in the meantime, container prices have nearly doubled.
The shortage of shipping containers is yet another symptom of the havoc the pandemic has wrought on international supply chains. As a result, freight costs are rising, which in turn leads to higher prices for consumer goods. “This matters in the near term because the supply issues will have a direct impact on inflation,” said Suresh Acharya, a professor at the University of Maryland’s business school who studies supply chain.
WHY IS THERE A SHORTAGE OF SHIPPING CONTAINERS?
The problem isn’t that there aren’t enough shipping containers in the world; it’s that the containers are in the wrong spots. “The story of the last 16 months is a growing container imbalance,” said Harvard Business School professor Willy Shih. “What you see is a messy buildup of containers in places where they’re not supposed to be.”
The pandemic is the main cause of their disarray. When the initial outbreak of Covid-19 forced China and many of its neighbors into national lockdowns at the end of 2019, the region’s massive manufacturing sector shut down. Cargo ships that were already en route out of Asia dropped off hundreds of thousands of containers full of goods in ports across the Americas—but because of pandemic restrictions, they couldn’t load those containers back up with new products to send back to Asia. Instead, the containers piled up in ports and inland rail depots.
HOW LONG WILL THE CONTAINER SHORTAGE LAST?
Eventually, the shipping industry thinks the container shortage will sort itself out. “It is expected that the situation will improve, bottlenecks are expected to be relieved, buying patterns likely to normalize, as well as additional vessels and containers entering the market in 2021, means that the current vessel and container shortage is temporary in nature,” Lars Mikael Jensen, an executive at the freight titan Maersk, told Ship Technology.