Over the course of the pandemic, we’ve seen massive supply chain disruptions, and thousands of businesses have felt the pain of delays to their product being delivered from one of the countless shipping containers stuck on a ship in the ocean or at port. As an increase in trade volumes compounds staffing issues at ports and driver shortages, this supply chain backlog shows little sign of improving anytime soon. How did we get here?
Before the pandemic hit, shipping containers were not often talked about. They were silently operating as the steel capsules of the supply chain, tens of millions of steel shipping containers sending billions of products all around the world. Supply chain interruptions early in the pandemic slowed some ports to a near standstill. This caused a large number of empty containers to stockpile in ports across the world. For a moment there was a container surplus, but that quickly changed as the shipping backlog grew worse over time.
Shipping Container Costs Continue to Rise
One of the largest impacts the pandemic has had on the shipping container industry is the price of an individual container. Before the pandemic you were able to buy a used 40ft shipping container for around $2,000 and rent one around $129/mo. However, shipping lines aren’t giving up their containers right now, so there aren’t nearly as many used shipping containers available. The container shipment shortage has caused rental rates to increase by double-digit percentages andused shipping container pricesto more than double over the past year or so.
Shippers Are Asking for More
Not only is the cost of the individual shipping container at an all-time high, but the cost of shipping is also rising. Trucking companies and shipping lines are also asking to be paid more to unload and deliver freight. Unfortunately, there was already a driver shortage before the pandemic. The shortage of available drivers means it doesn’t matter how fast we get containers to port, because they can only be moved one at a time from there.
Is There a Shipping Container Shortage or a Logjam?
The shipping container shortage could probably be better described as a logjam. Shipping container production has been at record levels in 2020 and 2021, but very few of those containers have made their way to the resale market because shipping lines have so much demand for freight.
In late 2021 dozens of container ships started queueing outside of the twin Ports of Los Angeles and Long Beach to ensure products hit shelves in time for the holiday season. With thousands of containers being unloaded from each ship, and efforts to accelerate unloading processes to clear the backlog, there’s suddenly been too many containers in some places. Communities near the Port of Long Beach have complained about trucks parking containers in neighborhoods because terminals were filled to capacity.
That problem isn’t just limited to Southern California. Major railways shut off West Coast traffic to Chicago for several days in late 2021 in order to clear out backlogs at the inland terminals there. There have also been some ports fining shipping lines up to $100 per container per day for shipping containers left at the port beyond a normal unloading period (in November of 2021, the Port of Los Angeles was issuing fines for over 60,000 containers per day).
The reality is it’s not the number of containers that’s the problem, but rather the velocity that’s the issue. Unfortunately, it could be months or even over a year until supply chain backlogs start to become resolved. Until then,used shipping container priceswill be severely impacted by the shortage created by that logjam.
FAQs
Shortly after the WHO declared COVID-19 to be a pandemic and manufacturers shuttered factories in response, many containers normally used to ship manufactured goods stopped moving. These containers were instead held at ports and inland storage facilities.
How to solve container shortage? ›
How Can I Overcome the Current Container Shortage? Less-than-container-load shipping provides a viable solution to the problem. In effect, this method allows you to share a container with one or more other shippers, making it easier to secure capacity, albeit with smaller cargo volumes.
How many shipping containers were lost at sea in 2020? ›
The average annual loss for the two-year period 2020-2021 saw an increase to 3,113 from the 779 of the previous period, driven by major incidents. In 2020 the ONE Opus lost more than 1,800 containers in severe weather.
What is the problem with shipping containers? ›
The shipping container shortage could probably be better described as a logjam. Shipping container production has been at record levels in 2020 and 2021, but very few of those containers have made their way to the resale market because shipping lines have so much demand for freight.
What caused the shipping crisis? ›
As global trade bounced back, shippers have been unable to meet the demand. Factors contributing to the container crisis include: Global shortage of containers, equipment and vessels. Truck driver and labor shortages.
What is causing container shipping delays? ›
Shipping container delays are the extended waiting times that shippers have to put up with when their cargo is held up in the transport process. They can have various causes, such as port congestion, supply chain disruptions, labour shortages, customs clearance problems or changes in trade policy.
Are shipping containers lost at sea ever recovered? ›
However, the vast majority of containers lost in deep waters are never retrieved due to the prohibitive costs and technical challenges involved. Prevention and Future Prospects. The shipping industry, regulatory bodies, and environmental organizations are working together to minimize the loss of containers at sea.
How often do shipping containers fall into the ocean? ›
According to a World Shipping Council (WSC) report, up to 1,382 shipping containers are lost at sea each year. The figure is based on three year averages calculated over a 12-year period – which represents 80% of the global vessel container capacity.
What happens to containers that fall overboard? ›
Most containers sink quite rapidly to the ocean floor once they hit the water. But depending on their contents, they may stay afloat for days or even weeks before sliding beneath the surface. This process can take even longer for refrigerated containers on account of their buoyant insulation.
Is there still a shipping container crisis? ›
As 2022 begins, the container shipping supply chain remains in the deepest crisis it has ever seen. Unwinding the disruption will take months.
When maintained properly, a shipping container can last upwards of 25 years or longer. The lifespan depends on the condition of the container and the environment in which it is kept. Although they are built to resist harsh climates, its' lifespan can be cut short by wetter, saltier climates.
What is causing shipping delays in 2024? ›
Causes For Shipping Delays In 2024
This includes not only geopolitical tensions such as the Houthi conflict in the Red Sea and the ongoing Russia-Ukraine tensions but also environmental issues like the severe drought in Panama, which has disrupted operations at the Panama Canal, a crucial conduit for maritime traffic.
Why are there so many shipping containers available? ›
A low order-to-inventory is a sign of weak sales. Since there is a decrease in consumer demand, businesses are ordering less goods. As a result, the containers used to transport the goods are not being used, creating an increased supply of containers.
How many shipping containers are lost each day? ›
For a long time it was unclear just how many of these containers go overboard each year on average. An estimate of 10,000 containers annually is entirely plausible, which would mean the equivalent of 27 containers lost every day.
Is the shipping container crisis over? ›
As 2022 begins, the container shipping supply chain remains in the deepest crisis it has ever seen. Unwinding the disruption will take months.
