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The global shortage of shipping containers, primarily caused by the Covid-19 pandemic, has led to drastic inflation in shipping and container prices and increased delay times for companies. Freight shipping has found itself in a unique situation where unforeseen events have left a global shortage of containers, which has had a domino effect down the supply chain, disrupting global trade.
Early last year, when the Covid 19 Pandemic began to spread, many countries began implementing national lockdowns and ceasing the production of goods, which ultimately pulled the plug on economic growth. Shipping companies began reducing the number of cargo ships that were being sent out. This not only stopped the usual flow of imported and exported goods, but also saw empty containers not being collected. The most significant example of this can be seen in the American regions, where Asian containers could not be sent back due to Covid-19 restrictions.
As countries started to grapple with Covid-19 to recover, China-the first country to be impacted by the disease-began to recover.
A significant number of containers have found themselves in inland depots while others have been stacking up at cargo ports.
As Asia slowly began to recover, other countries were still faced with national lockdown restrictions meaning containers could not be sent back to Asia (where they were really needed) to continue the trade partnership. The pairing of lockdown regulations alongside other factors, such as a staff deficit, meant a backlog of containers began to develop.
The Covid-19 pandemic has resulted in a shift in customer spending away from services to goods due to restrictions imposed by national lockdowns. This resulted in the issue of container shortage becoming even more prominent as desirability increased, with many companies being unable to secure containers.
Asides from the impacts of Covid-19 disturbing the usual flow of trade and container availability, another major factor was the Chinese New Year. Celebrated on 12 February, the holiday played a part more than ever this year when it comes to container shortage.
Generally, at this time of year, the industry can expect to see an increase in container tariffs and a slowdown of Chinese production due to most of the population being on holiday. This year, the impact was greatly magnified due to the ongoing container shortage which was prominent prior to the start of this year's celebrations.
Impact of container shortage on the UK
In the UK, all companies have been impacted when it comes to shipping goods and receiving product from the Far East.
We have goods that we are unable to ship because we haven't been able to get containers. This has delayed the production of new orders due to lack of space at suppliers.
It's a real impact. We are constantly having containers put back and whilst we closely monitor and push there is only so much we can do and advise the latest information we have at the time. Aside from the container shortage, importers in the UK and Ireland are facing additional charges and longer wait times. Continuous delays at ports such as Felixstowe-the UK's busiest container port, which deals with 48% of Britain's containerised trade-has resulted in a backlog of product waiting to be delivered, which increases the time the container takes to move on to its next destination.
Congestion at the port has been going on for several months, which has led certain cargo ships to drop containers at Northern European ports to avoid delays. This typically adds a further two weeks to lead times, adding further pressure on container availability.
Shipping costs have also inflated due to the port delays. The congestion at Felixstowe is affecting shipping costs because shipping lines are adding congestion charges coming to UK ports. Congestion of the ports has been a big issue.
Maersk, the largest container shipping line and vessel operator in the world, has been significantly affected by the container shortage but believes that the current situation will soon improve.
Lars Mikael Jensen, head of network and market east-west at Maersk, says:
"It is expected that the situation will improve, bottlenecks are expected to be relieved, buying patterns likely to normalise, as well as additional vessels and containers entering the market in 2021, means that the current vessel and container shortage is temporary in nature."
The global shortage and impacts of Covid-19 have left the industry in uncertain waters. However, container availability is gradually increasing while congestion is reducing in certain bottlenecks. As the year progresses, the industry hopes to see improvement on the horizon and sincerely appreciate our customers patience and understanding.