Why is there a shipping container shortage?

One of the significant problems importers and exporters have been grappling with lately is the shortage of shipping containers, which has negatively impacted the shipping industry. The drastic shortage of containers globally has resulted in an unavoidable increase in shipping and container prices as well as delay in delivery for companies which has disrupted international trade in different ways.

The unexpected Covid-19 pandemic primarily caused the global container shortage. When the pandemic started in early 2020, many countries imposed a national lockdown which undoubtedly affected global economic growth.

The national restrictions halt the production of goods and services, halting the flow of global trade among countries. Countries were unable to import and export goods and even return shipment containers back to China. So, empty containers lie in various cargo ports, in-land depots, and warehouses uncollected in countries like the United States, Canada, United Kindom, Australia, and other countries across Europe because containers cannot be sent back to the source countries due to Covid-19 travel restrictions. Some other containers are in South Asia and Africa; some of the region’s shipments were directed to when West ports could not be accessed.

However, as China and other Asian countries who were first hit by the pandemic began to recover and resume economic activities, they still couldn’t start international trade because their major global trade partners across the world are under intense national lockdown and many shipping containers from this countries are yet to be returned to China thus sufficient containers are not available.

The pandemic brought about the high demand for goods by customers due to the national lockdown restrictions. The inability of shipping companies to secure containers makes the issue of container shortage more significant, causing delays in delivery and the high cost of shipping, among other issues.

In addition, the Covid-19 pandemic, another major cause of container shortage in China was the Chinese New year celebration which falls on the 12th of February. The holiday influenced container shortage this year more than ever. Every year, importers and exporters expect the festival to cause container tariffs to increase or slow down production due to most factory workers being on holiday. However, the pre-existing container shortage before this year’s Chinese new year celebration makes the container shortage issue more prominent during the festive period.

To curb the container shortage issue, stakeholders in the shipping industry have come with various measures. One of such is the creation of a new booking system. For instance, a container booking service was launched by Alibaba Group’s Cainiao. The booking service can be used for air and sea freight in response to the global container shortage. The service coverage spans over 200 ports in 50 countries to reduce the backlog of empty containers. Mikael Jensen, head of network and market east-west at Maersk, opines that container shortage will be temporary and expects the situation to improve with things returning back to normal. It is also evident that container availability in the market gradually increases, and port congestion is reducing certain bottlenecks.