The global shipping industry is facing a new problem: Containers that were once "hard to find" are now too many to fit
It is reported that the global container shipping industry is facing a problem that is completely opposite to the previous "one box is hard to find": there are too many empty containers to fit. A slowing economy and falling demand from excess inventory have led to a backlog of empty containers at ports and not enough warehouse space to accommodate all of them.
According to a report by Container xChange, a container leasing and trading platform, the industry's order-to-stock ratio, that is, high inventories but slowing demand, has dropped significantly, which has a knock-on effect at different stages of container logistics. One of the most prominent issues is the lack of warehouse space, which will have a significant impact on container repositioning and transportation in 2023.
Christian Roeloff, co-founder and CEO of Container xChange, said: "There is not enough warehouse space to accommodate all the containers. As container inventory is further released into the market, warehouses will face more pressure in the coming months. A key challenge for some businesses and a competitive advantage for others, especially in China, where empty boxes are being repositioned."
Andrea Monti, CEO of Sogese, which has container warehouses in various locations in Europe, said at the Digital Container Summit in October: "Our warehouse in Milan is very crowded, and the number of containers is increasing, so that we are returning some warehouses. Requests for service agreements. We are now in a situation where warehouses in some locations cannot accept new customer requests.”
With Christmas looming, retailers are wary of high stock levels on hand "technically, the peak season for cargo shipments is not happening this year".
"Retailers have enough inventory," Monti said. "Once North America and Europe run out of inventory, they will order again and demand for capacity will pick up. It won't be back to the peak levels during the epidemic, but it will definitely be back to the long-term average." An upward trend. What is happening now is that goods are again 'on-time delivery, so we will see a slowdown in new orders as businesses adjust to more efficient ocean freight turnaround times."
Darin Miller, national maritime manager at global claims management provider Sedgwick, said that to address the problem of overflowing warehouses, ports such as the Port of Houston have started charging for containers parked at their terminals for more than seven days.
"Too many containers on ships or ports, often sitting for weeks at a time, is running out of warehouse space and this is only exacerbating the ongoing supply chain crisis as it affects the repositioning and movement of containers."
“For container owners, as more and more containers are piling up, this could mean rising container storage fees at warehouses,” said Johannes Schlingmeier, co-founder and CEO of Container xChange.
According to the latest Drewry report, there is currently an estimated surplus of more than 6 million TEU containers due to a record number of new containers being delivered in 2021. More than 7 million TEU of containers were produced at the time, and lessors and shipping lines also avoided retiring older containers due to congestion problems.
“Aging containers are now being sold to the second-hand market at an accelerated rate as ocean shipping lines address excess capacity in line with existing and short-term demand and vessel capacity forecasts. Since the summer, as shipping lines have not renewed contracts, the number of returned devices has increased significantly. This will continue until 2023.”
The latest monthly logistics report from Container xChange shows that average transaction prices and one-way rental fees for standard containers in China have fallen to their lowest levels in two years. October's price was ,711, and November (so far) has fallen further.
The CAx (Container Availability Index) value is much higher than before the epidemic, which means that compared with 2019 and thereafter, the number of incoming containers at Chinese ports this year is significantly higher than that of outbound containers.
Since May 2022, the one-way charter fee for a standard container from China to North America has decreased month by month, from ,773 to 4 in October. The one-way rental fee from China to Europe dropped from US,845 in January this year to US,726 in May, and dropped further to US0 in October.
Roeloffs added: "The decline in freight rates and container prices shows that there is weak demand for containers and there is a surplus of containers. The wider this gap is, the lower container freight rates and prices will be. With this year's busy season, logistics companies have already started to prepare for the Chinese New Year. gone."
A growing imbalance between supply and demand for containers, increasing shipments of empty containers to Asia and increasingly tight warehouse storage space will be topics of concern in 2023.