Flexport, a freight forwarding company based in the United States, said that it is now necessary to produce 500,000 new 20-foot containers to alleviate the current disruption to the global container supply chain due to lack of container equipment.
Nerijus Poskus, Flexport's vice president of global shipping, estimated in an interview with Bloomberg that hundreds of thousands of new containers will be needed to meet current market demand.
Nerijus Poskus told Bloomberg, “In order to alleviate the current container supply chain dilemma, at least 500,000 new containers need to be built around the world, which is equivalent to the number of 25 largest container ships in the world.”
The vice president of Flexport also said that the surge in demand has also caused the spot freight rate for a standard container across the Pacific to quadruple. This figure does not include additional costs related to equipment and insurance premiums to guarantee loading.
Due to the tight container supply chain, Volkswagen AG was forced to cut its production plan for the world’s largest car factory in Germany, and warned that the tight supply may spread to the world; Honda Motor Co. is also cutting five times. The output of the North American plant is difficult to purchase automotive chips.
Rob Subbaraman, global head of macro research at Nomura Holdings in Singapore, said, "Supply bottlenecks seem to be more pronounced in the United States and Europe, as their supply delivery time has recently slowed down again." "This is not good for Western industrial production and should lead to inventories. A steeper decline and put upward pressure on output prices."
"Anyone who pays for shipping in 2020 knows that the true cost of shipping is even much higher than the recent increase in shipping. We expect this number to only increase in 2021."
Maersk: Congestion in the container supply chain will not improve in the near future
A Maersk executive said that in the reality of strong demand, there is almost no excess capacity in container ships , and the congested supply chain can hardly be alleviated.
Maersk Line’s parent company AP Moller-Maersk A/S Latin America and the Caribbean Senior Vice President Fan Chuyan Robbert van Trooijen recently stated that the demand for container shipping services may still remain at an unusually high level in the near future. With almost no remaining container capacity, carriers and shippers will have to continue to adapt to the tight situation of the container supply chain caused by the pandemic.
Fan Chuyan also said that factories in China and other parts of Asia have increased production because their customers in other parts of the world are rebuilding inventory that was depleted due to the suspension of production at Chinese factories early last year.
He also introduced that at the same time, the current idle capacity of the container shipping industry is at a historical low of about 1.5% , so there will be almost no additional capacity to be used in the market in the short term.
In fact, according to the latest data provided by Alphaliner, as of December 21, 2020, the global proportion of inactive containers is only about 1% , taking into account that it includes ship docking maintenance, installation of desulfurization equipment and ballast water systems, etc. Situation, this is already the lowest level in history.
He said: "In the foreseeable future, the current supply and demand situation will not change significantly, because there is not enough new ship order capacity." "This (tight supply chain) situation may continue for some time."
The executive said that compared with the existing fleet, the current capacity ratio of new container ship orders is at the lowest level in history.
Due to the imbalance between supply and demand, we have also seen a sharp increase in container freight rates recently. Fan Chuyan refused to disclose his views on recent freight rates.
With the arrival of the Chinese Lunar New Year, workers need to return to their hometowns to visit relatives. After the Spring Festival holiday in February, the flow of Chinese manufactured goods to other parts of the world may temporarily stagnate. But he also emphasized that demand may remain high.
For example, Xinde Maritime.com has placed an order for 18 ships of 24000TEU! Will the shipping fee be reduced? According to the article, due to the relatively sluggish state of the container shipping industry in recent years and the uncertainty about future fuel selection, container shipping companies and shipowners have previously maintained a more cautious attitude towards ordering new ships.
According to data provided by Alphaliner, Maersk, the world's largest container shipping company, has been busy in business transformation in recent years, and currently does not have many new ship orders.
Fan Chuyan said that Maersk will not have a significant new capacity put into operation in the future , but will focus on opening up various nodes and improving the flow of goods on land and sea.
He also revealed that Maersk hopes to expand its logistics business in the region through organic and acquisition. He declined to say which acquisition method the company will consider. In the past few years, Maersk has made investments and acquisitions in areas such as customs declaration and inland logistics.
Brazil is a major exporter of commodities, and China's demand for these commodities is very strong, the most famous of which are soybeans and iron ore. These commodities are usually transported by dry bulk carriers, and Maersk does not use dry bulk carriers in its fleet. But Brazil is also a big buyer of Chinese manufactured goods shipped in containers.
Fan Chuyan introduced that the current supply of containers on this route is severely short, and the strategies adopted by some customers to bypass congested nodes have exacerbated this situation. He said that "some customers book two or three different" carriers to make sure they can move goods into or out of the country. "
He said that the company is working closely with some major customers to make operations smooth, including implementing a new system that will ensure that they have space and prevent overbooking.
Super congested Port of Los Angeles
Satellite AIS ship tracking data shows that currently about 30 container ships are parked at two ports near Los Angeles waiting for berths, and there are about 20 before Christmas. Los Angeles is the busiest gateway for American goods trade.
Logistics media American Shipper recently interviewed Kip Louttit, executive director of the Southern California Shipping Exchange, to understand the latest situation of ship congestion in San Pedro Bay.
He said that as of noon on Wednesday, 91 ships were in the port, of which 46 were at berths and 45 were at anchorages. Among them, 56 are container ships, 24 are at berth and 32 are at anchor.
It also introduced that several container ships will be anchored at the port on Friday, and the total number of anchorages will reach 37. But Louttit said, "From January 1 to today, there has been no significant change."
Louttit confirmed that the ship has actually filled up all available anchorages near Los Angeles and Long Beach. Ships also occupied 6 of 10 emergency anchorages near Huntington, south of San Pedro. If all the emergency anchorages are also occupied, then the newly arrived ships will have to go deeper offshore for drifting.
Yesterday, the captain of a container ship about to go to the Port of Los Angeles said that our ship had just left the Port of Busan and received news that it was expected to wait at least 4-5 days at the anchorage.
The fact that so many ships are anchored in the waters of the Los Angeles port also reflects the degree of congestion in the container supply chain. The last time so many ships anchored there was between 2014 and 2015, when the workers of the Port of Long Beach in Los Angeles went on strike for a period of time.
"On March 14, 2015, there were 28 container ships at anchor on the highest peak at that time. Looking at it now, this record has been broken," Loutitt said.
In a warning letter issued to customers this week, Germany’s largest container shipping company Hapag-Lloyd reported: “Due to the surge in imports, all terminals in (Los Angeles/Long Beach) continue to be crowded. (This) is expected to continue until February. ."
Hapag-Lloyd also stated that “the staff at the terminal is limited” and claimed that this is related to COVID-19. "This labor shortage affects a series of operations such as TAT (turnaround time) truck drivers at all terminals and transfers between terminals."
Hapag-Lloyd also confirmed that the congestion problem has spread beyond California ports. The company reported that “serious congestion” has also occurred in Canadian ports. “The berth congestion at Maher Wharf and APM Wharf (New York and New Jersey Ports) also affected all routes, and ships had to face several days of delay after arrival.”
