Due to COVID related supply and production delays, there is a global shortage of shipping containers. This shipping container shortage is leading to skyrocketing shipping prices and major delays.
E-commerce companies and many other businesses are starting to feel the financial strain of the shipping container shortage and higher prices, and many don’t understand what is going on behind the scenes to cause these problems.
So let’s take a closer look at the state of shipping container availability and prices in 2021, and alternatives to avoid the rising costs.
What Is Causing the Shipping Container Shortage?
A recent CNBC news article detailed the 2021 shipping container shortage and price spike. Although the article focused mostly on how the shortage is affecting goods shipped from China, it did note that the general strain on the market was reaching the United States and Europe, too.
The cause of the shortage? Put simply, it’s the global COVID-19 pandemic, Chinese trade and a lack of shipping alternatives.
COVID-19 and the Shipping Industry
The coronavirus pandemic changed everything for the shipping industry in 2020. As the virus spread across the world like wildfire, nations slipped into months-long lockdowns. Everything was canceled — including orders for new shipping containers. Even the orders that were placed were delayed due to factory shutdowns and raw material shortages.
As some parts of the world are starting to recover in 2021, trade volume is bouncing back in a big way. But the shipping industry is struggling to catch up to demand.
Chinese Trade and the Shipping Industry
COVID-19 appears to have originated in China, but the country managed to implement safety practices that enabled a relatively quick recovery and a return to container production.
As trade has bounced back, China has built up a trade surplus. The nation is sending a lot more goods to the U.S. and Europe than it is receiving from them. As a result, more containers are leaving China than are coming into the country. On the other hand, China and companies needing to export from China, have been aggressively purchasing shipping containers. These efforts, according to the CNBC article, have caused this shocking statistic: 75% of shipping containers leaving the U.S. for Asia are empty. That means shortages in the U.S. too as containers that would normally have been retired in the U.S. for storage are being sent back overseas empty.
Shipping Containers vs. Air Freight: Shrinking Alternatives
The go-to alternative to shipping via seaborne shipping container is shipping via air freight. Although some planes are used only for shipping, much of the global air freight capacity comes from extra space in the underbelly of passenger planes.
So, what happens to air freight capacity when travel restrictions, lockdowns and fear of a deadly virus cause passenger air travel to crash through the floor? The main alternative to sea shipping, air freight shipping, is suddenly in a tight spot.
Meanwhile, online shopping — as the alternative to in-person shopping — has surged over the last year. Online sales on Black Friday in 2020 increased by 22% compared to Black Friday 2019. Reported by the University of Michigan, those stats highlight how the pandemic has spurred more online shopping. Higher consumer shipping demand squeezes air freight even harder.
As air freight capacity faces challenges on all sides, it becomes a less viable alternative to sea freight.
Effect on Shipping Prices and Retailers
How has the shipping container shortage affected shipping prices in 2021? It has caused freight rates from China to the U.S. to triple since last March. The China-to-Europe route has seen a similar spike.
This past December, Asia-to-Northern Europe spot freight rates were up 264% over the previous year. The CNBC report also noted a 145% increase in spot freight rates going from Asia to the U.S. West Coast.
The usual spot rate hovers around $1,200 per shipping container. But currently, the going rate is closer to $6,000 per container.
Shipping rates from the U.S. to other countries have also increased, but the jump was not quite as severe.
Shipping Container Delays
With a shortage and high demand comes business opportunity. Many industry stakeholders have ordered new shipping containers, but like the goods waiting in warehouses to be shipped around the world, the production of these new units will likely encounter delays.
A recent report from the Shanghai International Shipping Research Centre predicted that the shipping container shortage and supply chain delays are likely to last at least through the end of the first quarter of 2021. Those delays will last even longer for the storage side of the shipping container industry.
How ModuGo Can Help
ModuGo works every day to provide the easiest shipping container purchase and rental experience in the industry. When global shortages and other factors limit supply and cause unheard of shortages, our mission becomes even more important. Here’s how we can help during this difficult time.
Match the Best Shipping Container Prices
We know business owners and logistics professionals were tired of overpaying for shipping containers long before the container shortage of 2021 began. If someone else has a better price, let us know. You can have the best price and all of the convenience our unique container renting and buying process offers.
Extensive Shipping Container Rental Options
We realize that a purchase isn’t always in the books or the right logistical choice. If your operations would be better served by shipping container rentals, we’ve got great options. Shop online, reserve the unit (or units) you want to rent, agree to the terms and you’re ready to roll. We make it easy and fast for you to rent the right shipping container, for the right price in the right timeline.
Offer Help from the Experts
When the shipping container market is this difficult to navigate, you need the easy approach to renting and buying shipping containers. Our customer service professionals are shipping container experts, and they are ready to guide you through every step of the process.