- Shipping costs have skyrocketed as desperate companies wait weeks for containers and pay premium rates to get them, according to industry watchers.
- Ikea’s Singapore operations called it a “global transport crisis” and estimates 850 of its 8,500 products are affected by shipment delays.
- Chinese tech giant Alibaba’s logistic arm Cainiao launched a container booking service last week in response to the global shortage.
A recent news article published in the CNBC website written by Weizhen Tan reveals that shipping costs have gone beyond the reality.
What is happening in container shipping sector?
A critical shortage of containers is driving up shipping costs and delays for goods purchased from China.
The pandemic and uneven global economic recovery has led to this problem cropping up in Asia, although other parts of the world have also been hit.
Industry watchers said desperate companies wait weeks for containers and pay premium rates to get them, causing shipping costs to skyrocket.
Trade surplus furthers container imbalance
There are a few factors stemming from the pandemic driving this phenomenon.
First, China is sending out a lot more exports to the U.S. and Europe than the other way round.
Its economy bounced back faster as the virus situation within its borders was basically under control by the second quarter of last year.
As a result, containers are stuck in the West when they are really needed in Asia.
Limited alternative
The shortage is further exacerbated by limited air freight capacity. Some high-value items that would normally be delivered by air, such as iPhones, now have to use containers via sea instead, according to Yeager.
International flight volumes have plunged due to virus and travel restrictions.
“Air freight companies typically use that extra capacity at the belly of a passenger plane. Well, there’s just not very many passenger flights, so not as much air service,” he said.
“The lack of options, combined with this crazy amount of demand, has produced this crisis.”
Race to build new containers
Chinese tech giant Alibaba’s logistic arm Cainiao launched a container booking service last week, citing the global shortage.
It said its service would span over 200 ports in 50 countries, and port-to-port shipping fees would be 30% to 40% cheaper, according to Reuters.
But even the race to build more containers could be hobbled by delays, according to Yeager. He said the pandemic has also hit the supply of steel and lumber needed to build containers.
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Source : CNBC
