The Shipping Container Shortage Continues
Over the course of the pandemic, we’ve seen massive supply chain disruptions, and thousands of businesses have felt the pain of delays to their product being delivered from one of the countless shipping containers stuck on a ship in the ocean or at port. As an increase in trade volumes compounds staffing issues at ports and driver shortages, this supply chain backlog shows little sign of improving anytime soon. How did we get here?
Before the pandemic hit, shipping containers were not often talked about. They were silently operating as the steel capsules of the supply chain, tens of millions of steel shipping containers sending billions of products all around the world. Supply chain interruptions early in the pandemic slowed some ports to a near standstill. This caused a large number of empty containers to stockpile in ports across the world. For a moment there was a container surplus, but that quickly changed as the shipping backlog grew worse over time.
Shipping Container Costs Continue to Rise
One of the largest impacts the pandemic has had on the shipping container industry is the price of an individual container. Before the pandemic you were able to buy a used 40ft shipping container for around $2,000 and rent one around $129/mo. However, shipping lines aren’t giving up their containers right now, so there aren’t nearly as many used shipping containers available. The container shortage has caused rental rates to increase by double-digit percentages and used shipping container prices to more than double over the past year or so.
Shippers Are Asking for More
Not only is the cost of the individual shipping container at an all-time high, but the cost of shipping is also rising. Trucking companies and shipping lines are also asking to be paid more to unload and deliver freight. Unfortunately, there was already a driver shortage before the pandemic. The shortage of available drivers means it doesn’t matter how fast we get containers to port, because they can only be moved one at a time from there.
Is There a Shipping Container Shortage or a Logjam?
The shipping container shortage could probably be better described as a logjam. Shipping container production has been at record levels in 2020 and 2021, but very few of those containers have made their way to the resale market because shipping lines have so much demand for freight.
In late 2021 dozens of container ships started queueing outside of the twin Ports of Los Angeles and Long Beach to ensure products hit shelves in time for the holiday season. With thousands of containers being unloaded from each ship, and efforts to accelerate unloading processes to clear the backlog, there’s suddenly been too many containers in some places. Communities near the Port of Long Beach have complained about trucks parking containers in neighborhoods because terminals were filled to capacity.
That problem isn’t just limited to Southern California. Major railways shut off West Coast traffic to Chicago for several days in late 2021 in order to clear out backlogs at the inland terminals there. There have also been some ports fining shipping lines up to $100 per container per day for shipping containers left at the port beyond a normal unloading period (in November of 2021, the Port of Los Angeles was issuing fines for over 60,000 containers per day).
The reality is it’s not the number of containers that’s the problem, but rather the velocity that’s the issue. Unfortunately, it could be months or even over a year until supply chain backlogs start to become resolved. Until then, used shipping container prices will be severely impacted by the shortage created by that logjam.