180 Million Transport Containers in the “Wrong Place”; What are the Causes of the Crisis?
The shipping industry has entered an unprecedented crisis because of the Coronavirus epidemic; It is expected to continue until the end of 2021.
Ships are used as a means of transportation for many products, containers are among the leading storage platforms used in transport.
Causes of Crisis
On this issue, the Turkish Anadolu Agency says that the number of containers, which we can know as “the indispensable large metal boxes in external shipping”, is not enough to run the current global trade as required.
This is in addition to the price of ship containers increased by 282% compared to last year, according to the “World Container Index”.
Professor at the Turkish German University "Huseyin Nuroglu” said in an article: “There are many reasons for the container crisis, they lead to each other and put the transportation sector in trouble”.
The most important of these reasons is that the containers are not where they should be, i.e., in Asia, this is affected by the plans that did not succeed under the conditions of the epidemic.
He explained: China, which is the most exporting country, and other East Asian countries produce many products needed by Europe and the USA, the most important of which are textiles and light clothing.
Since these products are sent in ship containers, these containers that go to Europe and the United States should be full, and return to Asia empty.
However, containers remained stuck in Europe and the United States, since the restrictions are still partially ongoing there, while China ended the restrictions and bans first, it returned to normal after the epidemic.
Mark Yeager, director of RedWood Logistics, points out that “there are 180 million containers in the world, but they are in the wrong place”.
He explained this by saying: One out of every three containers destined for China returns full, while most of the empty containers are waiting to depart from the western ports, to where they need them in the eastern ports.
According to data from the global trade data platform “Freight Waves SONAR”, China's exports to the United States increased by 54% compared to 2020.
In contrast, US exports to China grew by only 4.4%. According to experts, the largest number of empty containers must be transported back to Beijing as soon as possible to overcome the container crisis.
Other Problems
Nuroglu confirms: There is not only a shortage of containers as a problem in the transportation sector; It's hard to find empty spaces on ships too.
Trade was not expected to witness such a rise after the removal of restrictions, no additional investment was made in transportation beyond its normal limit.
He added: In addition, the number of border, port and warehouse workers remained less than it should have been due to the high number of injured among them at the beginning of the epidemic; Thus, the unloading and loading of ships slowed down.
According to information provided by CEO of Flex port Ryan Peterson, 5.5% of the world's container fleet is waiting to be unloaded at any port.
The shortage of containers, ships and staff also led to an increase in foreign transportation prices, for example, the fee for a standard 12-meter container was about $1,000-2,000 before the epidemic, but it is now over $8,000.
Besides all this, China - the world's largest container maker - and other container manufacturers are said to give priority to Asian exporters, which puts Western exporters in a difficult position.
He notes: Many sectors are negatively affected by this shortage, for example, recycling companies in the United States are having difficulty exporting materials in their warehouses, because they can't find containers, while container rental prices have increased by 50% in the past six months.
Role of the Epidemic
Nuroglu believes that the epidemic has not only changed many of our habits, but has also accelerated the process of change; Over the past period, online shopping has increased more than ever.
He says: Of course, the international companies that sell online have been the main beneficiaries of this; However, the unexpected increase in e-commerce has added to pressure on the transport sector, which is already suffering from a lack of capacity and low volume of transport.
Thus, e-commerce sites were unable to meet their delivery obligations, so a delay was inevitable.
He continues: According to the information provided by the Chinese official media, China Container Industry Unit (CCIA) has asked manufacturers to significantly increase their production, the producers raised their daily working hours to 11 hours.
But these measures will not solve the container crisis in the short term; Therefore, it is expected that transportation costs will continue to rise until the end of the year.
The writer concluded his article by noting that this year will be difficult; Especially since disruptions in the supply chain and transportation disruptions will negatively affect international trade, hence the global economy.
