Chaos in Container Shipping: Lack of Containers and Congested Ports

Chaos in Container Shipping: Lack of Containers and Congested Ports

21. December 2020
container port

Containers have been jammed at British ports for weeks. In Shanghai, every fourth container is stuck due to a lack of capacity and container freight rates are rising immensely. What are the reasons for the chaos in container shipping and what impact does it have on goods from China? Let me give you a brief overview of the current situation.

Not just the Corona crisis, but also Brexit is currently causing problems for the British. Many traders are trying to stock up their warehouses before the end of the Brexit transition period, which is on 31 December. Freight forwarders have therefore been reporting load problems at the largest British port, Felixstowe, since September. In addition, a large amount of storage spaces are still occupied with protective clothing from China. As a result, some ships with deliveries for Christmas have already been diverted to other ports. This is causing further delays and has increased the concern that the goods will not arrive on time. 

Export boom in China and delayed return from the USA

It is not only in the UK that demand for products from China has increased. Especially in the run-up to Christmas, consumption in the Western world is high. In the USA, demand for Chinese consumer goods has risen sharply, too. Whereas China seems to have the Corona pandemic well under control and has significantly boosted production again, other countries like the USA, for example, are affected by closures and production stops. One problem is that this delays the return of containers to Asia. 

In addition, the capacities on the container ships are already maxed out. As the German business newspaper Handelsblatt reported, in Shanghai alone, every fourth container is currently at a standstill for this reason. In addition, ship owners are diverting ships to the Pacific due to the high demand from the USA, which means that there are less ships routed to Europe from Asia. Due to the low capacities on container ships, the prices for transport are also rising exponentially. According to the Shanghai Container IZED Freight Index, container freight rates have more than doubled compared to the beginning of the year. However, since available capacity is low not only for sea freight, but also rail and air freight, a transfer from ship to rail or air freight is difficult to implement. 

Christmas and Chinese New Year 

Port congestion, shipment delays, booming online trade – Could this result in shortages shortly before Christmas? According to the Retail Association, this is generally not the case, as most companies are well prepared for the Christmas season and their warehouses are sufficiently stocked for the demand. However, some online retailers are already experiencing shortages of products that are in high demand, such as game consoles and electronic items. 

Furthermore, the choas in container shipping is not expected to ease before the Chinese New Year. Since most protective clothing is imported from China, there is also great concern that there could be supply problems. During the Chinese New Year holidays, running from 11 to 17 February, most of the production and shipping comes to a halt, this in turn could further aggravate the situation.

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