A shipping container shortage has caused prices to increase and availability to shrink across the world, but it isn’t actually a shortage – the issue is that shipping containers aren’t traveling across the world to the US as fast as they used to.
The COVID pandemic increased demand for imports, decreased production, created labor shortages and limited capacities, triggering the “shortage.” But delays at ports all over the world are growing since last year, throwing shipping containers off their normal routes.
When ships transporting containers don’t arrive at their destination ports on time, it snowballs down the supply chain, making it harder for companies that rent, sell or customize steel containers to increase their inventory.
China manufactures more than 90% of the shipping containers in the world. The reason the US stopped making them is labor and materials cost too much here to compete. So, companies that rent, sell and modify containers typically buy their inventory from manufacturers, carriers or brokers globally.
Since the disruptions began, shippers have been extending their container leases for longer than normal, and ocean carriers have raised freight rates to record-high levels. The combination of the long leases, high rates and delays led to 20 and 40-foot shipping containers doubling in price and heavy competition when buying them for inventory.
Because of the delays, more than half of the world’s shipping containers sit waiting on anchored ships. And many other containers are stuck in parts of the world that are on lockdown due to ongoing COVID outbreaks.
In years prior to the pandemic, only one ship – if any at all – had to anchor off the coast to wait to dock. But the average is up to 30 freight container ships per day this year (2021), with many ports setting records for traffic congestion. For example, Southern California ports set a record in January when 38 ships sat idle along the coast to wait to dock.
Container ships aren’t only piling up outside of ports, they’re also spending more time at anchor. Before COVID, container ships spent only one day on average at United States ports. This year, the average wait time at the Port of Los Angeles, the busiest port in the western hemisphere, is 10 days for container ships.
Two bills proposed by US Congress in 2021 hope to improve conditions at American ports by investing $16 billion into port and waterway infrastructure to lessen backlogs and increasing regulations on ocean carriers to limit delay-related fees. But these acts still need to be passed and won’t fully or immediately solve the current global supply chain issues.
Plus, the problem isn’t only in the US. Ports all over the world also have longer wait times, delaying trade routes globally. Unexpected accidents and natural disasters have only added to the problem.
For example, cargo ship Ever Given accidentally got stuck in the Suez Canal in Egypt for a week on March 23, 2021. As a result, it disrupted 12% of the world’s sea trade and delayed the 18,000 freight containers on the ship by two months. Four months later, Typhoon In-Fa forced 150 container ships to evacuate at Yangshan Deep-Water Port, the world’s busiest port, creating a huge backlog that increased delays worldwide.
As ports and countries continue to shut down due to COVID cases and other disruptions emerge, the shipping container “shortage” will go on, with experts predicting it will last into 2022.
This is why it’s pricier and harder to get ISO containers for uses outside of shipping, such as portable offices at construction sites, commercial storage, residential moving or customizing containers for living, workspace, education, healthcare or government.
Despite the challenges stemming from all of these circumstances, SMS works hard to ensure we can always provide you with high-quality Conex containers and fair prices whether you rent, buy or modify. Here’s how we continuously have your back during the global shipping container shortage.