Why is there a shipping container shortage?

May 13 | 2021

Sarah Manning, Managing Director of container supplier Secure Stores Nationwide, explains the reasons for the shortage and how long it is likely to last.

Sarah ManningIn short, COVID-19 and the resulting lockdowns around the world has caused the shipping container shortage. For the past 12 months, people have been stuck at home, unable to spend their money on holidays, experiences and eating out and have instead been buying items for their homes and gardens online. Consequently, shipping lines have seen an unprecedented demand for shipments of Chinese produced goods around the globe.

Congestion at ports has meant empty containers are taking far longer to get back to China for reloading. There have been cases for example, of over 30 gigantic container ships, at anchor off the coast of Los Angeles, waiting to get to the quay to unload.

Shipping lines have been ordering thousands of new containers from the manufacturers in China - where almost all of them are made - blocking up production and forcing prices up to the highest levels ever seen. Where slots for production can be found, they are expensive and shipment to the UK and other markets is taking longer than usual. This has resulted in a shortage of new build ‘trade’ containers.

Second-hand units are also in short supply, since the shipping lines are sending more empty containers back to China, while demand is so strong, rather than retiring them for sale.
In addition to COVID 19, the cost of iron ore also reached a peak not seen since March 2013, which has not helped matters.

When is availability expected to return to normal?
The Chinese container manufacturers are now fully booked until the end of July 2021. Stock manufactured in July would normally reach the UK around September/October, so we know that availability will remain low until at least then, but this is likely to be later as there have been no signs of a drop in demand as yet.

Beyond September/October, it will likely be a case of how well the global vaccination programme goes. Once people are out of lockdown, and able to travel again, their spending focus will probably return closer to normal and ease the pressure on consumer goods. Some industry experts predict that the situation will not ease in 2021, but it is safe to say for now that there won’t be any easing before at least Q4.

What is the forecast on pricing?
Container pricing is being quoted as far as August by the factories (ETA UK October), and remains high. Some experts predict that prices will not drop during 2021, and even if they do any reduction will be small while demand remains so strong.

Ordering containers this year?
With availability being so limited customers are planning further ahead and pre ordering containers before they reach the UK. You should think about your purchasing requirements as far ahead as possible and talk to suppliers about what they can provide later in the year. Pricing can be quoted a few months ahead, as the factory price for production runs already scheduled will be known.

For the very latest market information e-mail Sarah or visit the website.

Photo: Sarah Manning.