Slower container circulation cripples global shipping system

Just another of the 101 reasons why globalism is a lousy idea. The entire global logistical system is like one giant Rube Goldberg device that relies on all of these interlocking activities around the world to act in unison, with no hitches, delays or inefficiencies. Nobody ever stops to think about all of the different ways the chain can break (weather disruptions, earthquakes, war, disease, raw material issues, "Acts of God", etc).

Anybody that thinks globalism is a better approach to manufacturing & supply than what we had before (countries/regions operated as independent, self-contained and self-sufficient entities) is deluding themselves. Globalism was never about positively impacting anybody's quality of life; it was a means of vacuuming out the economic prosperity of the middle class of "developed" nations and re-consolidating that as wealth at the top of the pyramid.

I think it's a keen observation OP, and worthy of discussion. If you add the effect that this "container conundrum" has on product prices, along with oncoming bout of inflation, it's the perfect storm of supply scarcity and ideal economic conditions for huge price increases.

a reply to: Flyingclaydisk

Fwiw, I've looked into burying containers.
Isn't worth it.

They're not designed for the side load and just collapse like a tin can. The amount of drainage and re-enforcement required negates the savings over a traditional concrete bunker.

They make excellent sheds, though! I've got four.

It's true my industry contacts tell me there are actually bidding wars for getting containers on top of the standard shipping cost. For example lets say a company has a rate that they charge $3000 dollars to ship full container of their products that is in the contract to buy that much of whatever. But the supplier has no containers to ship them, to the buyer goes to a third party and offers to rent one for $1000 for a round trip to the west coast. Now his shipping is 4K cost. Or he can buy one for around 5K but that might be impractical, although he could sell it when finished.

The ships are sailing at lower speed to save money on fuel. That with poor weather conditions.

thefederal.com...

company in India getting into the container manufacturing business

According to China Container Industry Association, the average container turnaround times have gone up to 100 days from 60 days due to COVID-19-related handling capacity cuts in Europe and the US. Since most of the international air passenger fleet, which often carries cargo, was grounded during the peak pandemic curbs, the demand for maritime freight rose sharply.

The Indian Express quoting officials said each component needs to be made from scratch, since India has never made them. So a PSU like Braithwaite needs to install a rolling mill to churn out these unique components.

According to Seatrade Maritime News, freight rates have shot up by 200-400%. Besides, there have been cancellations of scheduled vessels, even as the rescheduling of regular calls has created a demand for container slot allotments. This is affecting India’s exports and is also leading to escalating freight cost, it said.

originally posted by: SleeperHasAwakened
Anybody that thinks globalism is a better approach to manufacturing & supply than what we had before (countries/regions operated as independent, self-contained and self-sufficient entities) is deluding themselves.

The United States was shipping food stuffs (and other commodities) globally from the mid-1800's onward, for example, we supplied the UK with the bulk of it's beef.

news item on CNN: Costco is running out of some cheese. The reason why is complicated

Costco is having trouble stocking imported cheeses because of a shortage of shipping containers around the globe and bottlenecks at key West Coast ports, such as Los Angeles, Long Beach, Oakland and Seattle. The combination has led to delays for suppliers shipping their goods, retailers like Costco receiving products, and higher costs along the supply chain.
"Overseas freight has continued to be an issue in regards to container shortage and port delays. This has caused timing delays on certain categories," Costco chief financial officer Richard Galanti said on a call with analysts last week.

www.cnn.com...

I guess the key word is IMPORTED. I seem to remember a glut of milk and dairy products in the USA last year. because, covid.

www.freightwaves.com...

The number of container ships stuck at anchor off Los Angeles and Long Beach is down to around 20 per day, from 30 a few months ago. Does this mean the capacity crunch in the trans-Pacific market is finally easing? Absolutely not, warned Nerijus Poskus, vice president of global ocean at freight forwarder Flexport. “It’s not getting better. It’s getting worse,” he told American Shipper in an interview on Monday.

“What I’m seeing is unprecedented. We are seeing a tsunami of freight,” he reported.

“For the month of May, everything on the trans-Pacific is basically sold out. We had one client who needed something loaded in May that was extremely urgent and who was ready to pay $15,000 per container. I couldn’t get it loaded — and we are a growing company that ships a lot of TEUs [twenty-foot equivalent units]. Price doesn’t always even matter anymore.”

recovery from covid could take some time.

hoping everything settles out soon. no need for things to be worse than they must.

anyone in the industry with any insight?

originally posted by: ElGoobero
anyone in the industry with any insight?

What they are saying above is correct. The industry that I work in is seeing a 10 times increase in both containerized and air freight fees which is causing a supply bottleneck coupled with much longer lead times as there is little to no stateside inventory.

Also, don't forget that most of the exports from the United States going to Asia go by bulk carriers, not containerized ships, whereas most of the exports from Asia to the US are coming via containerized carriers. It doesn't take long before all the ships and containers are on the wrong side of the ocean with little to nothing to back-haul. If they sail with less than full capacity then freight costs go up in both directions.

Bai-Dan didn't cause this situation, but he's not helping fix it either. Trump tried to fix some things but it wasn't enough. Obama was a disaster. Bush II was a net-zero in the equation, and Clinton was in full reverse. The point is, this situation wasn't created overnight, and neither will it be fixed overnight either. And the whole CHICOM Flu thing just accelerated the carnage to Warp speed.

It cost around $2000 each to build shipping containers in China.

Fill the container with $50,000 in products and ship it to the US and the container is paid for.

Chinas biggest export to the US is shipping containers.

Since they only cost $2000 to build in china and can sell for $3000+ in the US and this makes them pure profit if they get back to China full of imports from the US.

If they haul $500.000+ worth of electronics from China to the US the Chinese see them as packaging just like cardboard boxes. if they don't get them back no big deal.

I work in this industry and actually gave a talk on this subject last week to a network of Manufacturers.

The cost to purchase a new shipping container out of China has doubled in the past three months and the waiting time to get a slot in the factory to build them is about six months. At the same time, the global shipping lines are holding on to their current stock so there is limited quality used containers in the market.

The cost to ship the containers has also doubled and in some cases tripled over the past few months.
If this continues, and I can't see pricing coming down any time soon, then we can expect significant price increases in the cost of goods.

The invention of the shipping container changed the global economy. The modern day shipping container was first used in 1966 and it not only significantly reduced labour costs to ship goods, it standardised the way freight is carried by road, rail and sea globally. The first container ship carried 253 containers, today ships can carry 20,000 containers.

On the positive side, the rapidly rising costs of International shipping is good news for local manufacturing industries in Western Countries who have not been able to compete with cheap labour costs in China. The COVID-19 pandemic seemed to make everyone realise the importance of being able to manufacture goods locally and not be reliant on cheap offshore manufacturing. The rising costs of containers and shipping is now making it a viable option economically and there is already more support coming from Governments for local industries.

And if you want to put a conspiracy theory to this, only one of the six major shipping lines is Chinese owned. The rest of them are European. They own the shipping containers and they decide the cost to ship them.

One of the main reasons behind the global shortage of shipping containers is the backlog of ships sitting in the US waiting to be unloaded.

Combine this with the massive increase in shipping costs being charged and I cant help but wonder if this is part of a much broader plan by the US and European Governments to slow China's economic growth and even the playing field without doing something blatant like implementing large tariffs.

a reply to: Seagle

Combine this with the massive increase in shipping costs being charged and I cant help but wonder if this is part of a much broader plan by the US and European Governments to slow China's economic growth and even the playing field without doing something blatant like implementing large tariffs.

Interesting perspective. Hmmmmm...

originally posted by: ANNED
It cost around $2000 each to build shipping containers in China.

Fill the container with $50,000 in products and ship it to the US and the container is paid for.

Chinas biggest export to the US is shipping containers.

Since they only cost $2000 to build in china and can sell for $3000+ in the US and this makes them pure profit if they get back to China full of imports from the US.

If they haul $500.000+ worth of electronics from China to the US the Chinese see them as packaging just like cardboard boxes. if they don't get them back no big deal.

I've been told the same for the UK. It's cheaper to just build new than reuse or re-ship the containers. Can buy used ones for £200- £300 over here, used to be £500.

From the sounds of it there seems to be a paticular bottleneck affecting US availability

All the airaplanes not flying people!
take the seats out and fill them.
this helps the air indastery to.
a lot of small stuff Can fit.
the door is 42 inches wide by 72 inches high.
that is big!

a reply to: buddha

That's exactly what's happening! The big cargo carriers like UPS, FedEx and DHL are flying at maximum capacity, and have been for quite a while now. They're converting aircraft from desert storage and leasing subcontractors as fast as they can to meet demand. Air cargo is at an all time high. And everyone is eyeing the now retired A-380's trying to figure out if they can find a way to convert them to freighters (which unfortunately is very difficult and inefficient. Probably one of the most colossal design flaws in aviation history, that one!). Notice you won't find many airworthy 747's sitting around in the desert, nope those babies are flying freight.

www.npr.org...

Soaring demand from Americans for everything from iPads to cars is leading to a surge in freight crossing the Pacific, hitting business owners like Nephew.

When the cargo with his games finally arrived on the West Coast, the container was immediately emptied so it could be sent back to China for another load.

The games then continued on to Minnesota by truck, rather than rail, which would have been more economical. The final shipping cost was about $12,000, at least 50% more than the game maker had budgeted.

Businesses around the country are wrestling with similar challenges in getting their goods.
The record volume of cargo has overwhelmed longshoremen, truck drivers, warehouses and railroads. Vessels are waiting up to five days just to get into port, and it can take 10 more days for a container to be loaded on a train.

the good news is, economic recovery.
we just need to be patient while the supply infrastructure catches up.

"They say there's not enough containers in Europe, lack of space on the boats," says Philip Marfuggi, CEO of the Ambriola company and a board member of the Cheese Importers Association of America.

It not only takes up to twice as long for shipments to arrive, he says, but deliveries have become less predictable.

"Like the other day, I had eight containers show up," Marfuggi said. "They should have been like two a week. And then all of a sudden, they all showed up at once."

Going to take a long while for things to get back to normal - this story hasn't received much publicity (least, not in the UK or on any social media that I have seen) but .....

The Chinese province of Guangdong has faced a sudden uptick in Covid-19 cases. Authorities have moved to shut down districts and businesses to prevent the virus from spreading rapidly.

That’s causing massive shipping delays in major Chinese ports, and jacking up already-high shipping costs as waiting times at berth “skyrocketed,” according to analysts and those in the shipping industry.

“The disruptions in Shenzhen and Guangzhou are absolutely massive. Alone, they would have an unprecedented supply chain impact,” said Brian Glick, founder and CEO at supply chain integration platform Chain.io, told CNBC.

Another shipping crisis looms on Covid fears in southern China