Container shortages in Asia, especially China and India, are worsening as dwell time in the US and Europe increase and carriers struggle to return enough empty containers. The global supply chain is at risk at falling behind at a critical time, just before the upcoming peak shipping season.
A spike in orders in July and August following the reopening of economies after the coronavirus lock down is the root cause of the shortage. Demand for E-commerce merchandise and medical supplies in the US has kept US warehouses, especially in Southern California scrambling to keep up. At the same time, productivity is down because of strict social distancing requirements. As a result, containers stay on chassis at warehouses much longer than normal.
Typhoon season is another cause for the delay in container returns. Vessels are thrown off schedule and forced to skip dropping off empties to avoid bad weather in China, South Korea and Japan.
The Carriers’ Advantage
Ocean carriers’ solution is to take away equipment “free time” and more strictly enforce per diem rules. The carriers’ ability to restrict free time extensions reflects the advantage carriers have in the supply chain market. With an upper hand, carriers can drive the cost of imports in the US and Europe. Customers who are desperate to move product are left with no choice but to pay the price of surcharges on top of record-high rates.
The Empty Container Repositioning Dilemma
Trade imbalances and carrier inefficiencies have been an increased problem in the shipping industry and there are no signs of this changing. It’s very common to see containers in Europe and the US empty while ports in Asia wait patiently to fill them for export. The delay also means extra handling charges at terminals and ports, storage and maintenance fees at warehouses and additional fees for inland transportation and sea freight fees. These costs are passed to the carriers who pass them down the line, and, ultimately at the consumer level.
What Worldwide Logistics Can Do
Please contact your Worldwide Logistics Group account representative with any questions or updates. Worldwide Logistics is committed to work toward finding cost effective solutions for its importers.