The pandemic caused more than just a momentary toilet paper shortage!
Due to a series of events, a worldwide shipping container crisis is having a domino effect on the whole supply chain.
Here’s what you need to know:
- The global shipping container crisis is more of an imbalance rather than a shortage – we have enough containers, but there’s an unequal distribution between countries and continents.
- Asia doesn’t have enough shipping containers, as high demand for products made in the region meant that there was far more exporting, and not enough imports to return the empty containers.
- In comparison, Australia has too many containers – an excess of 50,000+, as we’ve been importing more than we’ve been exporting.
- Because of this, many ports in Australia have increased their stevedore charges (the cost to load/shift cargo), which means that shipping line charges have increased too.
- Industry action and union stoppages have also affected the industry.
Why did this happen?
At the risk of sounding superstitious, bad things happen in threes:
1. COVID lockdowns slowed down the entire export business (remember China was the first to go into lockdown, and they’re a HUGE exporter). This was early in 2020.
2. Later in the year, our global demand changed. Our spending habits shifted – as consumers, we became more oriented towards wanting things like treadmills, rather than spending our money on eating out. This increased demand for exports, coupled by different countries’ lockdown laws, made it extremely difficult for ports to move containers in and out.
3. The Suez Canal blockage. When the Ever Given ship became stuck, it blocked one of the world’s most frequented canal routes. This caused freight shipping delays by days, weeks, and even months.
Where did it begin?
It began with the lockdowns. Because some countries implemented lockdowns to contain the spread of COVID-19, economic movements and productions were paused.
Multiple factory closures resulted in a large number of containers being left at ports.
In order to balance out the cost of ocean rates, carriers reduced the number of vessels out at sea. This majorly slowed down imports and exports and resulted in empty containers not being picked up.
What’s happening in Australia?
The number of containers entering Australia is significantly higher than the number of empty containers leaving.
Australia’s imbalance can be attributed to a few factors:
- A demanding peak season
- A considerable rise in the number of imports
- Not enough labour to cope with the surge of containers arriving at our ports.
This influx has left our ports in a bit of a predicament. Port Botany and the Port of Melbourne both have “container parks”, which are close to reaching their capacity.
This is why ports have decided to increase their stevedore charges, as there is far more work to be done.
Basically, our imports are higher than what we export.
What does this mean for McHugh and Eastwood customers?
- Generally, we are seeing that freight forwarding rates have increased, especially for ocean freight. On a month-to-month basis, these rates have been quite volatile.
- Guaranteed/priority options have now been established within the global market. This means you can pay higher rates to secure empty equipment and space.
- Lead time to secure space on vessels has been prolonged
- There may be delays in getting booking confirmations
If you’d like to know more about how this may affect your supply chain, we have customised solutions for your freight shipping needs. Contact McHugh and Eastwood today!