COVID-19 dominates the news cycle and is top of mind for everyone right now. Supply chain teams have been working through it since January when China’s workforce was hit. Up until now, the primary focus of conversations related to supply chains have focused on imports; however, container shortages are now impacting exporters. Simply said: containers are out of balance. That should ease by May. Here’s what’s happening.
Every year we experience a two- to three-week container shortage in the Midwest after Chinese New Year that creates a hiccup to the supply of containers. This year’s shortage was lengthened and magnified due to the extended shut down at ports in China stemming from COVID-19. The ripple effect of Chinese workers being sick or staying home meant factories shut down, carriers idled ships, and inbound containers collected on docks at Asian ports. These containers are needed in the United States for export cargo.
An article from industry publication splash247.com says, “The massive box imbalance brought about by the trade war and then the Covid-19 sees Chinese ports rammed full of boxes waiting to move, while carriers are urgently deploying extra tonnage to other hubs where equipment shortages are now at their lowest levels ever.”
As a result, earlier this month, some of our requests for export bookings, which would load in early April, were declined due to a projected lack of containers in the Midwest. Container xChange, an online platform used to locate containers, maintains the Container Availability Index (CAx) to forecast supply and demand in container logistics for most of the biggest port locations that shows:
- Container availability at the ports of Long Beach and Los Angeles (a main U.S. port), and at Hamburg, Rotterdam and Antwerp (Europe’s Main Ports) are now at their lowest levels recorded since tracking started in 2018.
- Los Angeles is well known for having a surplus of containers. The situation currently shows the port is at an all-time low this month.
- Conversely the port of Shanghai currently has a surplus of boxes sitting on its quayside, roughly three times as many as there were this time last year.
To ease the situation in California, steamship line MSC is redeploying two of its largest ships to move containers from Asia to the United States. The the nearly 24,000 TEU ship MSC Mia, which currently holds the joint record as the world’s largest container vessel, and the nearly 24,000 TEU ship MSC Nela, are on the move to help the container imbalance. Despite carriers sending more ships to move containers to their required destinations, the equipment shortage is expected to take time to get better.
According to an article from industry publication JOC.com last week, a turnaround is anticipated in May, with Global Port Tracker forecasting a 9.3% increase, followed by an increase of 9.6% in June. Retailers and non-vessel-operating common carriers are urging customers and supply chain partners to prepare for a surge in cargo by late April, as factories in China continue to rebound. Expect the Midwest to feel the surge with containers arriving by mid to late April.
Steve Klinger vice president of business development for Cargo Services, an Indianapolis-based freight forwarding company founded in 1992.