Coronavirus pandemic triggers shipping container crisis

Coronavirus pandemic triggers shipping container crisis
Dirk Kaufmann 12.04.2021 https://www.dw.com/en/coronavirus-pandemic-triggers-shipping-container-c...

Most goods are transported around the globe by ship, making overseas containers essential. But demand for the metal boxes far outstrips supply at the moment.

Anyone who needs to ship something big — or a great deal of something small — rents what is known as an intermodal container for the purpose. But that's not an easy task at the moment — there simply aren't enough transport boxes available. Buying a container isn't easy either.

The German daily newspaper Frankfurter Allgemeine Zeitung recently reported that there are only two companies in the world that build and sell shipping containers — both are based in China.

Anyone in Europe seeking to buy one can only get it secondhand: Even new containers are first loaded with goods in China and used for one shipment before they can be taken possession of here.
Why are shipping prices skyrocketing?

The costs of rent and shipment have also risen. Before 2020, transporting a standard 40-foot (12-meter) container on a ship sailing from a Chinese port cost about $1,000 (€840) — currently, one has to pay up to $10,000.

Rising prices are always a sign of imbalance. In this case, it is a sign of increasing demand (for containers or shipping space) with stagnating or even declining supply.

But there is also a shortage of ship space at the moment. "There are hardly any reserve ships left," Rolf Habben Jansen, CEO of the logistics firm Hapag-Lloyd, told the German weekly magazine Der Spiegel.

Many shipowners invested little in their fleets in recent years, he said, "because they have not earned the cost of capital over many years. Nobody expected the high demand for shipping transport due to the pandemic. There will not be more ships in the short term."
Global problems

Despite the short term dearth, the problem is not only about insufficient numbers of new boxes. Containers are almost never used for one-time transport and are instead part of a global system.

As soon as a container loaded with Chinese toys, for instance, has been unloaded at a European port, it will be filled with new goods and may then carry German machine parts to Asia or North America.

But for a year now, it's been difficult to maintain the global timetables that regulate intercontinental shipping, as the COVID-19 pandemic, which began in early 2020, has continued to fundamentally disrupt global trade.

Suez was just an episode

Whenever there is talk these days of supply bottlenecks or a failure to deliver goods, the Ever Given disaster in the Suez Canal comes to mind.

Although the ship has been freed and the canal reopened, the story isn't quite over, says Rolf Habben Jansen. "The ships will now arrive in Europe or Asia with a delay of one to two weeks. There could be further congestion there if too many freighters arrive in the major ports at the same time. The return trips will be delayed, and some will have to be canceled altogether," he noted.

Annette Krüger, spokeswoman for the company Hamburger Hafen und Logistik (HHLA), shares a somewhat similar view. But for her, the Suez Canal blockage is just one small piece in the overall picture of global a logistics plan that has gone entirely off the rails.

"Ship delays of two weeks — in some cases considerably more — are a situation that HHLA, as a terminal operator, has had to deal with for months now," she told DW.

Krüger says HHLA has gotten used to such delays because, "hardly any ships have reached the Port of Hamburg on time since the beginning of the year."

She says the problems began around nine months ago, "after production in East Asia was ramped up again following the first coronavirus lockdown and demand for shipping capacity increased significantly. Other factors included unfavorable weather during the winter months and, at the turn of the year, Brexit."

Hamburg as part of a port chain

Annette Krüger also expects "even longer shipping delays" but says these cannot be easily calculated as "Hamburg is not the first port of call after the Suez Canal" for ships from East Asia, she said.

In fact, much depends on turnaround times at Mediterranean ports or in Antwerp or Rotterdam.

All of Europe's major ports are currently suffering from steadily increasing delays in intercontinental ship traffic.

For instance, capacity at Rotterdam, Europe's largest port, is reaching its limits, as a spokesperson for the port said last week: "One can't expand the infrastructure at will. We have to make do with what we have in terms of quays, cranes and terminals."

The whole system is sputtering

The problems are not limited to ports, however, as the delays also impact other parts of the economy.

Every "import container" that brings goods becomes an "export container" shortly thereafter, transporting other goods around the world, Krüger pointed out. "Because of the ship delays, managing export cargo is a particular challenge," she stressed. "The later the ships arrive, the longer the export containers sit at the terminal facilities."

Rolf Habben Jansen therefore wants to "use the containers more efficiently" in the future.

He said Hapag-Lloyd could be "making the empty boxes available to our customers a little later than before, that is, only five days before departure instead of 10."

Hamburg's HHLA has already "taken various steps to control the inflow of cargo," said spokeswoman Krüger. In addition, it has also taken care to ensure there is enough space to store the metal boxes and have activated "100,000 square meters (over 1 million square feet) of additional storage space for containers," she noted.

This article was translated from German.