The number of available shipping containers rose significantly in 2022 after cargo vessels preyed on dependent businesses by charging exorbitant rates. The average 40-foot container rate skyrocketed from $1,262 in September 2019 to $10,361 in September 2021. Spot rates were nearly double the average Asia to U.S. cost at more than $20,000. Adding insult to injury, shipping times took approximately 200 percent longer than the previous year.
As a steady influx of newly constructed containers enters the market, rates appear to be in retreat. At the end of April 2022, the average rate had fallen to $7,768 and shipping delays have largely been attributed to China shuttering the Port of Shanghai, international sanctions, and supply chain disruptions related to the Russia-Ukraine war. Cargo vessel organizations and brokers indicate more than 50.5 million containers were in play in January 2022. That figure stands about eight million higher than before the pandemic.
“At export ports, the Shanghai ships wait longer to get loaded, and at import ports like Los Angeles they are stuck because there is no space at container depots,” Lars Jensen, of the Denmark-based Vespucci Maritime, reportedly said. “There were enough containers and a lot more were added, but it won’t help if every part of the supply chain moves slower.”
Offsetting some of the gains in global container capacity are delays caused by a lack of U.S. port infrastructure and anxious retailers ordering inventories earlier this year. Containers imported from China take an average of 100 days to reach their final destination. Before the supply chain bottlenecks, companies received goods and materials in about 45 days. Still, 100 days appears to be far better than 2021 when ships idled at sea for upwards of a month, in some cases.
“Importers are now bringing in cargo just in case, not just in time, and it makes up for more boxes sitting at the port. They will continue to be tight until early next year if we don’t increase the velocity of getting them off the ships and off the port,” Port of Los Angeles executive director Gene Seroka reportedly said. “The time a container takes to go on a train is more than six days. It should be two, and the volume of imported boxes designated for rail is up six times since February. During the pandemic, there was crazy demand. Now, there is too much inventory still coming in.”
More than 95 percent of Southern California warehouses are reportedly at or near capacity. Major shippers such as Hapag-Lloyd added 50,000 containers during the second quarter of 2022 alone. With an additional eight million containers in circulation, the average and spot rate costs are likely to be influenced by freight carriers moving them to customers. The question is whether trucking and intermodal operations can keep pace with imports and exports.
Sources: wsj.com, bloomberg.com, statista.com
“The question is whether trucking and intermodal operations can keep pace with imports and exports.”
With hundreds, if not thousands, of trucks waiting hours (days?) to get into a port to get or deliver a container, trucking isn’t the problem.
The biggest problem is the fact that the west coast ports were running 24/7 before the “pandemic”. Now, they’re not.
I was talking to a guy who “has a buddy who used to be a longshoreman in Oregon” – take this for what it’s worth….. He said his buddy told him part of the problem is that at the beginning of a shift, the crane operator has to be tested for CoVID – this can take upwards of two hours. And the last hour of the shift is “decontaminating” the interior of the crane cab, leaving only 5 hours available for the crane to work during an 8 hour shift. Add this to the fact they aren’t working 24 hours any more ….
It’s interesting that during the worst of the “pandemic” while Trump was in office, we still had relatively low fuel prices and no “supply chain” issues. It was after Biden took office that fuel prices started rising, and it was only 3 months after Mayor Pete was installed that the “supply chain” issues started. Coincidence? I think not…..
You sure are a Texan! Hey what about the election being stolen?
Haha.
Yes, took it for what it’s worth. Total nonsense!