Given the current context, we felt it necessary to inform you about the causes and effects of the current container shortage in order to successfully manage this exceptional period.
CAUSES :
Since mid-September, we have been witnessing a totally unprecedented situation in the world of maritime transport, leading to a current shortage of equipment (20 Dv /40 Dv – HC / 40 Reefer) which is generating such scarcity that freight rates are soaring to unprecedented levels, without resolving the imbalance between supply and demand for the time being.
The initial triggering event was the COVID 19 pandemic, which confined many of the world’s populations and drastically reduced global economic activity from March to June in Europe, Africa and the USA, and from January to April in Asia.
This drastic downturn in economic activity prompted shipowners, in a policy of anticipating the worst-case scenario, to gradually dispose of the part of their fleet that was chartered (leased and therefore not owned); this operation represented a reduction in capacity of almost 40% of the world fleet.
Meanwhile, containers that had been shipped at the start of and during the lockdowns remained docked for a long time before being picked up by importers. As port handling staff were also affected by the containment, port operations were reduced, also leading to a slowdown in operations. As a result, evacuation resources were also reduced and adapted to the drastic slowdown.
China was the first country to emerge from confinement, and was able to quickly resume a whole section of global production that had been slowed elsewhere in the world, and to supply the other countries gradually emerging from confinement from May onwards.
Against a backdrop of recovery in consumption, the end of confinement and the resumption of production in China, the concentration of world production in Asia rapidly created a bottleneck that was reinforced by the seasonal explosion in American consumption in anticipation of the end-of-year festivities (Halloween / Thanksgiving / Christmas and New Year’s Day) and the change in consumer habits linked to confinement (more DIY / outdoor / decoration and home improvement goods).
CONSEQUENCES:
This strong imbalance between supply and demand has pushed freight rates to a level of almost 6,000 Usd / Teu on the China / USA West Coast trade, where containers are then sent back for delivery to the American Midwest and remain in inland depots for very long periods.
This has created the shortage that we saw starting up in China and which is now spreading to Europe, because freight rates from China to the USA are very attractive, so containers in Europe are being shipped back very quickly (even empty) from Europe to China so that they can be loaded quickly in the USA.
The other markets, notably the Asia/Africa trade, have had to catch up with the profitability of the Asia/USA trades to be able to attract equipment to their market: hence the explosion in freight rates on all the other trades, which do not ‘discourage’ booked volumes and do not resolve the shortage either.
This situation can also be seen on departure from Europe now, due to the shortage of equipment that has overtaken us.
In this context, Centrimex is pulling out all the stops to work in the best interests of its clients, while fighting day in, day out to maximise the amount of equipment and space available on board vessels.
Eric LIAUTARD
Sales Director
