Pandemic “hit” transport – Lack of containers, increase in fares

The outbreak of the pandemic we have been experiencing lately has caused global chain reactions in all sectors. The transport of goods could not remain unaffected. In particular, the empty containers available are not enough to meet the transport needs.

This shortage causes difficulties in the supply of all kinds of goods, with the situation existing since last November. Increased demand, fewer container clearances and an increase in profits for the Tactical Line companies, the so-called Liners, as there was a parallel increase in fares.

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“In the last quarter of 2020 there was a huge increase in the volume of maritime transport. Mainly from China Cross Pacific, ie to USA, Canada and South America. An increase is also observed in the Intra Pacific, ie from China to Australia, New Zealand, Thailand, Indonesia, etc. It seems that after the first wave of the pandemic, China is recovering and is now controlling the flow of trade. Even Europe, which is facing serious problems due to the second wave, has increased its imports from China and the Far East. China has a huge volume of exportable goods while importing less. As a result, there is a shortage of containers. The Chinese have asked Liners to send them as many empty containers as they have. The message the Chinese have sent to the companies is “scan whatever empty container you have,” say shipping executives, adding: There is a delay due to the high demand for cargo and the lack of empty boxes. “By February 14, 2021, which is the New Year for China, the situation will worsen. A breath is expected to be given at the end of February. This shows that China has returned dynamically as it is the first exporting country in the world”.

Commodity shortages are higher in the US and Europe, as delivery times have increased again and this in turn affects industrial production, import prices and stockpiles.

To meet the delays and meet current demand, Flexport Inc. vice-president Neritzus Poscus estimates that 500,000 more containers are needed, enough to fill 25 of the largest merchant ships.

Naturally, these delays, as well as the lack of empty containers, lead to an increase in fares, and according to analysts’ estimates, the situation is expected to normalize after the first quarter of 2021, naturally passing the costs on to both consumers and businesses.

The timeline of the problem

Stonenews addressed executives of shipping companies in Greece. Regarding the situation that has taken place, they report the following:

“When a severe local lockdown was imposed in China, which among other things affected the operation of container factories (China is one of the leading container manufacturers in the world), practically nothing was built for 2-3 months. Shipping lines (Liners) to prepare for the possible collapse of the forecasted fares, began decommissioning ships and removing entire services from March – April 2020 that served the China-Europe, China-North America & Latin trade links. America as well as Europe-America. This kept fares at sustainable levels for shipping. Around June – July 2020 they began to see a significant increase in demand for containerized transport from China to America (North and South) but this demand exceeded in size the ability of shipping companies to put additional ships and so fares began to reach levels record in this trade. Shipping lines, wanting to take advantage of the situation, began to bring more and more empty containers to China (mainly from Europe) to load them full of high freight to America. At this point, in August 2020, two new data emerge simultaneously, first the increase in demand for containerized transport from China to Europe and second the return of containers from America where they ran out due to the pandemic. At the same time, reduced production of new containers in Chinese factories continues due to Covid-19.

Reaching today, the Chinese authorities announce to the media that Covid-19 has been revived, recently it was the first recorded death after 8 months. Taking into account the attitude of the authorities in 2020, a total lockdown is expected immediately after the Chinese New Year of 2021 (12/02/2021) with all that this implies for the operation of the container manufacturing plants”.