Global Shipping Container Shortage Now Facing a Surplus
While there was a shortage of containers at the height of the Covid pandemic, the global economy is now facing the opposite problem: too many containers.
On top of falling freight rates, data shows container depots — used to house containers after they are unloaded — are now filling up or full.
It points to more signs of falling global demand and an impending economic slowdown.
Traders and shippers say the decline in global consumer demand is not a sign the global economy is normalizing after a frantic post-lockdown consumption rush but a downward shift in consumption appetites.
What has happened now is that the cargo is ‘on time’ again and hence you’ll see a slowdown in new ordering…
“There is just not enough depot space to accommodate all the containers,” online container logistics platform Container xChange chief executive Christian Roeloffs said in an industry update this week.
Monti told Container xChange that the peak season of goods shipments — as Christmas looms — “technically did not happen this year.” Retailers are cautious about the high level of inventory they have on hand, Monti said.
“What has happened now is that the cargo is ‘on time’ again and hence you’ll see a slowdown in new ordering as companies adjust to more efficient turnaround times in ocean freight delivery.”
To combat full and overflowing depots, ports such as the Port of Houston have started levying fees for empty containers sitting in terminals for more than seven days, according to global claims management provider Sedgwick’s national marine manager, Darin Miller.
“Often left sitting for weeks on end, the sheer number of containers on ships or at ports, leaves us with insufficient depot space which only exacerbates our ongoing supply chain crisis as it impacts container repositioning and movement.”
The latest Drewry composite World Container Index — a key benchmark for container prices — has fallen again to $2,773 per 40-foot container. That’s 73% lower than the peak rate in September last year.
Source: CNBC.com
