MAJOR LINES EXPERIENCING CONTAINER SHORTAGES IN EXPORT PORTS

All the major carriers are experiencing equipment shortages at Asian ports with popular 40ft high cubes in particular short supply at Chinese depots.

Anecdotal reports suggest CMA CGM currently has a shortage of equipment at all of the main Chinese ports, while other carriers are advising of shortages at some docks and “near normal” availability at others. However, one Chinese forwarding source said equipment availability was more about “what you are prepared to pay”, with some lines introducing a “box priority fee”, payable at the time of booking.

And many carriers have introduced restrictions on the release of empty containers prior to the intended shipment.

For example, Hapag-Lloyd will now only release empty containers from its mainland China depots a maximum of eight days prior to the estimated arrival of the intended sailing. And with surprising robust export demand, particularly on the transpacific, expected to continue into the traditional slack season and beyond the Chinese Golden Week holiday, the equipment shortage looks unlikely to improve for some time. However, one carrier source told The Loadstar today the line was working “very hard” to resolve issues in Asia by repositioning as much equipment as possible.

Meanwhile, for the secondary tradelanes such as Latin America and Africa, where 20ft boxes are more commonly used, shortages are also an increasing concern for shippers. According to the xChange’s Container Availability Index (CAx), the availability of 20ft containers at Asian ports is “set to reach new lows in the coming weeks”.

It added: “If we have a look at the availability at Port Kelang, Malaysia, we see the availability of 20ft standard containers has seen an abrupt drop since week 36. Going from a value of 0.47 to 0.21 two weeks later.”

The CAx also indicated a reading of 0.27 for Shanghai for week 39. A CAx value above 0.5 indicates a surplus of equipment, a reading below suggests a deficit.

The shortage of equipment in Asia comes on top of rocketing spot rates on several tradelanes, especially from Asia to the US west coast, where after seven GRIs the current Shanghai Containerized Freight Index (SCFI) reading stands at an all-time record of $3,841 per 40ft, and looks set to break $4,000 before the month end.

Carriers are also hiking other fees, such as terminal handling charges in Europe, which has angered shippers that believe the lines are taking unfair advantage of a strong position.

“They are making them [surcharges] up as they go along”, one forwarder contact claimed to The Loadstar, after receiving a new advisory. 

Nevertheless, there is some sympathy for carriers that have seen demand from Asia confound all analyst predictions, while the pandemic still rages around the world.

“I’d usually be sceptical, but it would appear that the shortage of equipment is very real across all liners we’re speaking to and others that we hear through the grapevine, said UK-headquartered Westbound Logistics co-owner Ryan Clark.

“I actually asked the question, suggesting they would be giving away freight rates on the backhaul leg to get the boxes repositioned,” said Mr Clark, but the carrier’s response was ‘no, actually that’s the worst thing we need right now, as they all demand 14-21 days’ free time. It’s more profitable for us to ship empties back to get them loaded on the import sector again as quick as we can’.”

SHORTAGE OF CONTAINER EQUIPMENTS - CAUSING DELAYS IN SHIPPING

 A container shortage in India is causing long delays for exporters, especially on US trades.

Earlier this month, The Loadstar reported the operational impact from the creeping equipment shortage in Asia – dominant headhaul traffic has caused empties to pile-up at ports in the US and Australia, for example, prompting carriers to plead for the swift return of used import boxes.

According to New Jersey-based Worldwide Logistics (WL), the equipment shortage has spread to India, partly due to a drop in import volumes from China after trade restrictions were imposed by the government.

“The shortage is most critical at Inland Container Depots (ICD) but also evident at port-side locations,” the forwarder noted.

“Cargo volume from India to the US is extremely strong, as US importers look to replenish inventory depleted during the shutdown period in India, in response to Covid-19.”

WL said most direct and transhipment services to the US east and west coasts from the major gateway ports of Nhava Sheva (Mumbai) and Mundra were impacted, with transhipment further exacerbated by the tight space from Asian transhipment hubs.

“There is limited new container manufacturing in India which would otherwise serve to alleviate some of this pressure,” it added.

As a result, WL said carriers had begun to offer guaranteed space surcharges of US$750 per container, similar to the ‘no-roll’ premiums found on the deepsea trades over the past couple of months.

Rakesh Pandit, CEO of Conbox Logistics in India, agreed the container shortage was particularly acute at inland terminals.

“The shortages are bigger if shippers have to plan their cargo from dry-ports of central and western India,” he told The Loadstar.

“There is waiting period to get bookings and containers for one or two weeks on certain sectors, such as pharmaceutical companies who have to wait almost two weeks to get bookings for US ports.

“Shipments planned in large volumes like marble, rice and other agro commodities are also getting delayed,” Mr Pandit added.

He said the current ocean freight market was experiencing spiralling costs caused by shipping lines implementing increased surcharges, blank sailings and rolled cargo. For example, reefer rates to the US have increased 25%-30% to $4,000-$4,500, and, with further increases expected in October, the rate could soon breach $5,000.

“Shipping lines are also changing ocean freight rates very frequently – within seven days, instead of maintaining them for a month which was the case previously,” he explained.

Furthermore, he said there was a lack of government support for exporters rocked by lockdowns.

“Exporters are finding it hard to execute orders due to a lack of government support in the form of stimulus or financial aid. They’re also at the mercy of bankers, who aren’t supportive in the current market situation,” Mr Pandit claimed.

On the import side, he noted the market sentiment in India is very negative, with many businesses afraid the Covid situation will continue for another year.

“There is low demand for almost all products within India, so import growth will not be huge in coming months,” said Mr Pandit.

Indeed, according to the Indian Ports Association, port volumes between April and August plummeted 25% year-on-year to 3.2m teu. And, similar to India’s airfreight market, export volumes are gaining in share over imports.