Yes, you might say it is artificially created, and you probably got enough about COVID stories, well, it triggered also the disruption in the supply chain, that started the worldwide shipping container shortage, with prices of shipments going through the roof due to the crisis.
The shipping cost escalated to more than almost four times the normal rate, with a 40ft shipping container moved from Asia to North Europe ( Netherlands ) has risen from $2000 to $9000, while from China to West Coast of the US, it went up by 145%.
China’s trade economy is recovering at a rapid pace and there is still a huge influx in demand of products rather than services, the container crisis and high shipping rates are expected to continue throughout the year or 2021.
Some of the top leasing companies Triton and CAI , are saying that there is a tight box capacity, the well known Chinese companies CIMC, DFIC and CXIC, that produce around $80% of the world’s containers, are saying that even their production is up sharply, they estimate a 8% growth in container capacity this year, the boxes aren’t being built fast enough to ease the shortage.
Triton is saying that a lot of containers that were produced this year, they’re just making up for the ow production volumes in 2019 and 2020, and that we are still catching up.
In other words, production is working to fill the gap, but is not fast enough to compensate the demand and not manufactured units from the past two years, so the market won’t be anytime soon flooded with excess new containers, to bring down the container and shipping price.
We also have to understand that the relief from container crisis is not just about production. Many containers have been held up in port congestions all over the world, especially on the west coasts of the US, where there is a line of ships waiting to be unloaded and also by issues such as the Ever Given accident in the Suez Canal. When such logjams clear, more containers will become available.
So let’s hang tight and watch what will happen in the next quarter, with the hope of an easy transition to a better pricing and a faster end of the shipping container crisis.
