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No End in Sight to China’s Chronic Container Shortage, Soaring Freight Rates, Insiders Say
Pan Yinru
DATE:  Dec 02 2020
/ SOURCE:  Yicai
No End in Sight to China’s Chronic Container Shortage, Soaring Freight Rates, Insiders Say No End in Sight to China’s Chronic Container Shortage, Soaring Freight Rates, Insiders Say

(Yicai Global) Dec. 2 -- China is suffering a great dearth of shipping containers due to a big imbalance in global trade, exacerbated by the Covid-19 pandemic, which has led to containers full of goods leaving China and then not returning. This in turn has jacked up the price of transport. There is no sign of the situation improving in the short term, industry insiders have said.

Shanghai Port, the world’s busiest container port, is in a state of ‘massive container deficit,’ according to the Container xChange Container Availability Index, which quantifies the number of containers available in major ports worldwide. The CAx for 40-foot high containers in Shanghai is just 0.07, well down from 0.69 the same period last year. A reading below 0.5 indicates a shortage, and anything above 0.5 shows a surplus.

And it is not just Shanghai Port. The CAx for Qingdao Port, one of the world’s 10 busiest ports, is between 0.14 and 0.23.

“Empty containers are very difficult to buy or rent in China,” Florian Frese, spokesperson for Hamburg-based Container xChange, told Yicai Global. The tight supply might ease by spring next year, should there be a vaccine for the novel coronavirus available by then, he added.

The world is relying on Asian countries such as China and Vietnam, which have had more success with bringing the disease under control, for their manufactured goods, Chen Yang, editor-in-chief of the freight information consulting platform Xindemarinenews.Com, told Yicai Global.

As a result, containers packed full of commodities go to Western countries, especially the US, Europe and Australia, but then stay there due to a lack a China-bound orders, Chen said.

High Prices

The scarcity has been driving up shipping rates. Shipping companies have been raising their prices week by week and even day by day over the past few weeks, an employee at a shipping agent told Yicai Global.

This is especially the case for the most popular shipping routes to Western countries. The price to ship a container from Shanghai to Los Angeles has more than tripled to USD4,000 from USD1,200 in March, he said. The cost will continue to go up as Christmas approaches, he added.

Tough Measures

Strict epidemic control measures at ports and tight employment policies are not helping matters. Two-week quarantines of ships and their crews arriving in ports and nucleic acid testing for sailors have slowed customs clearance.

A number of containers used in cold chain logistics that recently entered China were also found to be contaminated with the novel coronavirus, further exacerbating the shortage, Chen said.

Finding a Solution

Cargo companies are endeavoring to find a solution, but it is not as simple as deploying more taxis on the streets, Chen said.

Some are even refusing orders with homeward-bound cargo so that they get the empty containers back to China as soon as possible and catch up with their sailing schedules, he said.

Some investors are sensing an opportunity in the container manufacturing sector. Chen advised caution, however, saying that as soon as the pandemic stabilizes, there will be a surplus of containers once again.

Editors: Tang Shihua, Kim Taylor

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Keywords: Supply Shortage,Container,Trade Imbalance,Ocean Shipping,Industry Analysis,COVID-19,Pandemic