Shipping Container ‘Shortage’ Slows Supply Chain and Sends Costs Soaring for Businesses

By James White Thursday, February 4, 2021

The COVID-19 pandemic has had an enormous impact on businesses and startup companies globally. Besides causing businesses like restaurants and movie theaters to close their doors to the public and forcing other companies to stall product testing, such as self-driving car startup Cruise, the global pandemic has now contributed to what some are claiming to be a “global transport crisis” as a result of a shipping container shortage.

Multiple shipping containers stacked on top of each other.

Businesses Battle for Shipping Space Amidst Heightened Costs

As countries across the globe fight to control the spread of the virus at their own pace, economies are beginning to recover worldwide at varying speeds and times. Due to some regions recovering faster or earlier than others, an imbalance of shipping containers was created. Namely, the massive demand for products and raw materials from China requires more shipping containers to be exported than the country has readily available.

“The surge in demand worldwide for logistical services at this time has resulted in a global shortage of shipping containers, congested seaports, capacity constraints on vessels, and even lockdown in certain markets, amongst other challenges,” read a statement from IKEA Singapore on the official company Facebook page. Customers of the company have experienced delays in their shipments directly related to the shortage.

As a result of this imbalance of shipping containers and extremely high demand, shipping rates have skyrocketed as businesses battle to claim the open containers. According to the CEO of Redwood Logistics, Mark Yeager, rates have jumped 300% for freights from China to the US and Europe.

Johnny Tseng, owner of J&B Clothing Company Ltd. based out of Hong Kong, told BBC News that it now costs him $14,000 to ship to the UK. The previous quote for shipping a container was $2,500.

"It's chaos," Tseng said. "We are making a loss. We take it as a loss leader and keep our fingers crossed it will go back to normal after Chinese New Year, but it is a major issue if it persists this way."

In addition to the stress imposed on shipping supply lines via the sea, air freight supply chains have also experienced additional challenges due to the pandemic. Travel restrictions and lockdowns limited passenger flights in 2020 and simultaneously limited air freight capacity, as passenger planes frequently carry additional cargo besides passengers and their luggage. As a result, businesses and companies, including Apple, whose iPhones are typically shipped via air, have had to resort to shipping via the sea in some capacity to account for the decline in cargo space.

Concluding Remarks

The world economy felt the impact of the COVID-19 in numerous ways last year, as did businesses, companies, and startups around the globe. As a result of economies worldwide being in different recovery stages, an imbalance of shipping containers has occurred, where countries with a high demand for exports, such as China, are sending out more containers than are returned. In response to the imbalance, shipping rates have massively increased.

About the Author

Headshot for author James White

James White is a Michigan State University graduate with a B.S. in Environmental Biology. He is interested in reporting emerging trends in technology, especially with regard to alternative energy and environmental conservation.

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