As the essence of world trade, the shipping container industry is so widespread that it impacts virtually every global sector in some aspect. Some are more extreme than others. Nearly every product, good, or part circulating throughout the global economy is transported within these all-encompassing metal containers.
Despite shipping containers being a physically sturdy and reliable entity, the container industry is proving to be quite the opposite.
Shipping containers have been in short supply as an aftermath of the pandemic's impact on global trade. The high demand yet short supply has proven to be a rather logistical nightmare that the industry can’t seem to wake up from.
Specifically, Indian exporters are becoming increasingly frustrated with the wait times to access shipping containers, often waiting as long as three weeks to find one. Those exporters in Britain are also finding that their shipments are becoming delayed, often even for two months. Despite the delays, the high demand and other logistical factors have meant container prices have nearly doubled.
The industry has implemented many tactics in an attempt to combat this widespread and disruptive issue. However, it is proving to be a much larger problem than anticipated, as it has never been faced on such a large scale before.
So how has the production levels of shipping containers been impacted throughout the shortage crisis, and what does this mean for the industry’s future?
Global Container Shortage Recap
Adding to the list of consequences as a result of the Covid-19 pandemic is the global container shortage. When you combine the fact that 90% of the world's goods are transported by sea and the global nature of the pandemic affecting people and industries globally, it is unsurprising that the shipping container industry has taken such a hit.
However, as the pandemic could not be predicted, neither could its impacts. So, at the beginning of 2020, when the pandemic first became widespread, the container industry was not prepared for the commotion about to come.
In the early stages of 2020, consumer demand had decreased, with people being more concerned and practical with money amidst such unprecedented times. In addition, the national lockdowns in China and surrounding countries also resulted in the massive shutdown of the manufacturing sector in that region.
As a result, the container lines cancelled many of their routes, and those already en route out of Asia dropped thousands of containers in ports globally. However, the low consumer demand meant these containers were not being reloaded and sent back to Asia and remained backed up in the ports.
What happened was that the usual flow of imported and exported goods was significantly altered, empty containers were regularly collected, and ports became incredibly congested.
While this seemed like an ‘easy fix’ issue for later when the world wasn’t still drowning in chaos, it has proven not to be so simple. Now that consumer demand has increased again, the container industry is struggling to untangle itself from port congestions and altered routes.
Now, the major issue is moving containers stuck in the wrong places quickly enough to be returned to the normal global trade cycle. In this sense, the problem is not a shortage of physical containers but a lack of them in accessible spots.
To put things into perspective, it has been estimated by some of the world's largest shipping container groups that 20% more containers are bound in shipments than they were before the shortage crisis.
There are many significant detrimental aftermaths of this container shortage, including the rising freight costs causing subsequent higher prices of consumer goods. While this is undoubtedly an issue of concern for consumers, it is also directly detrimental to inflation and the stability of the supply chain.
Shipping Container Production
The shipping container production industry comprises three main Chinese groups that make up 80% of the containers globally. These groups are expected to produce a record unit of containers in 2021 to respond to the shortage crisis.
In August 2021, the industry's largest group, CIMC, had already sold 1.15 million dry cargo containers, reaching new records. Globally, it is predicted that throughout the entire year of 2021, 4.7 million TEU would be produced, greatly dominating the previous 4.42 million TEU produced in 2018.
These manufacturing companies have continued to produce mass volumes of shipping containers. However, it is warned that it isn’t likely to impact easing the container accessibility issues. So, while 2021 was a record-breaking year in terms of new boxes produced, the global container crisis doesn’t seem to be easing any time soon.
After port congestion has been affecting the industry for over a year, the container cycle will provide a slow sense of relief, returning to regular pre-covid routines. Unfortunately, despite the gallant efforts from shipping container production companies to increase the supply of containers, it is unlikely they will be an accessible solution until well into 2022.
What is Next for the Container Industry?
So production, prices, and congestion all remain high; what is next for the container industry?
Despite the increased production efforts not assisting with the shortage crisis, it is still necessary that production continues to increase. The post-pandemic supply-demand is likely to return to normal, and very slowly, ideally, the container supply will too. And, container production is a vital component within the normal functioning of the container industry.
While the state of shipping containers and global trade is currently looking rather bleak, and there is no specific end date in sight, it understandably takes time for such a large industry to adapt to such a major disruption.
Freight rates are expected to remain high into 2022, and current industry practices are not proving to resolve the issue effectively. However, some major multinational companies have indicated they seek to regionalise their supply chains and find alternate tactics to combat the crisis.
In a period of immense unpredictability, it can be daunting to make big financial decisions and investments. If you are interested in purchasing or renting a shipping container but are uncertain about the state of the industry, contact the team at Tiger Containers today for more specialised information.