March 26, 2021
With positive signs that the global economy is ramping back up, new challenges have begun to emerge for importers. Currently, there is a shipping container shortage that is limiting many companies’ ability to get their goods from overseas to U.S. shores. If you’re one of the businesses being directly affected, you might not know where to turn or exactly how to make sense of yet another hurdle thrown up in front of you.
The shipping container shortage in 2021 is a result of many factors. Higher than normal demand for products, gradual recovery from the COVID-19 pandemic, and layoffs in the global supply chain are just a few of the causes. While availability of containers is improving, the current shortage is expected to continue for some time.
Regardless of your situation, it’s essential to be informed about exactly why and how the shipping container shortage will affect you going forward and how USA Customs Clearance can mitigate the impact that you experience.
There are a number of reasons for the current shipping container shortage, but the majority of them point to the COVID-19 pandemic. When the pandemic took a stronghold in early 2020, the global supply chain experienced a significant disruption. Manufacturing and transportation came to a screeching halt all across the world. However, various countries and regions of the world shut down at different times. This caused a massive imbalance in terms of shipping container availability.
Outside of the repercussions of COVID-19, another notable event that contributed to the shortage, as well as shipping delays was the Suez Canal Blockage. Thankfully, the blockage was removed and the canal is now accessible. However, many shippers have now begun to look into alternative to the Suez Canal. To learn more about this, check out our article Alternatives to the Suez Canal.
Asia, specifically China, was one of the first regions to be affected. Their manufacturing plants were shut down and production of many essential goods stopped immediately. After this occurred, a flurry chain reaction of events took place.
The shipping container shortage began to become more visible around this time. China was one of the first countries to lift restrictions and reopen manufacturing. However, the majority of shipping containers were stuck at ports in the U.S. and other countries all over the world. These countries were slower to reopen which meant the products that were being manufactured in China had a significantly low availability of shipping containers to be transported in.
Terry McElroy, a General Manager at R+L Global Logistics’ Cincinnati regional office, notes this is when the shortage really began to take place. “The uneven closing and reopening of the various countries and regions across the world ultimately led to the situation we’re in now,” McElroy said.
McElroy explains how R+L Global Logistics has been able to serve clients in finding available shipping containers despite the limited supply.
“Thankfully, we have established relationships with numerous agents overseas which gives us a unique advantage. Some logistics companies have an exclusive agreement with one agent, which limits their ability to secure shipping containers. Our flexible and strategic approach has served our clients extremely well during these challenging times,” he said.
While the situation revolving around the COVID-19 pandemic has vastly improved and we get closer to overcoming it, the impact of the above events is still being felt. The initial backlog caused by the pandemic and uneven reopening across the world has caused this shortage to drag on.
Maybe amidst all of this talk of a shipping container shortage, you find yourself wondering why you need one in the first place. However, these containers serve several crucial roles in both the protection and importing and exporting of goods that make the use of them invaluable.
One of the main reasons why these containers are so coveted is because of the security they offer to cargo. It stands to reason that if potential thieves don’t know what is being shipped, they’re less likely to try to steal it. Also, it is protection for your own items during transit. With no outside objects or inclement weather to possibly come into contact with your goods, the cargo is much more likely to withstand a journey across the ocean that can easily top 6,000 miles.
The containers themselves are extremely durable, often lasting 10-12 years before being unable to serve their specific purpose. But they’re also valued by shippers for the ease in which they can be checked by security at customs. What this means is if a governmental agency such as the U.S. Customs and Border Protection has any suspicions about the contents, the shipping container can be easily opened to verify its contents. Furthermore, the containers generally have all the pertinent information about what’s inside posted on the metal box itself.
Shipping containers are also prized because of the sheer versatility of what they can carry. While certain precautions or cleaning might have to take place in between loads, the same container could hypothetically carry cars on one journey and consumer goods on the next. There’s really no limit to what one container can accomplish for a business. Also, the minimum amount of weight that a container needs to safely ship is 2,000 pounds (1 ton) with the maximum reaching into the tens of thousands depending on the length of the container. This allows you to easily have all of your goods transported at once, instead of in waves, which would lengthen the time and cost for multiple trips.
One other big benefit in using shipping containers is also linked to versatility — this time in the different modes of shipping they’re able to be used in. Even though a shipping container is going to arrive to a given port on an ocean freighter, it can then easily be transferred from the boat or port and then loaded onto a rail as one of the cars or even onto a flatbed truck for an easy way to bring a full shipping container directly to a warehouse or retail outlet to unload. Since many shipments are done using intermodal transportation — two or more methods of shipping to get a load from the beginning to the end — shipping containers can have an important role in facilitating this.
The easiest, most direct answer to offer when posed with the question of which goods are affected is: nearly all of them. Yet that does a poor job of explaining why certain goods might be more impacted than others.
Common household staples such as coffee and toilet paper (again!) are on the long list of products and goods that will bear the brunt of the shipping container shortage. In actuality though, it is not just home essentials that will be impacted. Anything considered a consumer good will feel the squeeze due to this event.
Semiconductors and computer chips are a great example of a product directly affecting the ability of other products to be manufactured. These are items already being impacted acutely because of COVID-19 but the knock-on effect of there not being enough containers to ship these components (on top of a more limited supply) means that items that use them heavily — smartphones, computers, video game consoles and event automobiles — are not being constructed. This leads to more demand than supply, which either makes the item in question harder to find and/or raises the prices for such goods since there’s not enough to go around.
Paper products including toilet paper are another great example of this. Toilet paper itself is a byproduct of the raw material pulp, which of course comes from trees. Pulp is sent to a paper mill in order to be turned into paper towels or toilet paper, those finished items you see on store shelves. But what happens when the people who harvest the trees in Brazil can’t even get it sent to a paper mill in China or the United States? That’s right, a shortage at every step of the process.
While these are a few specific instances where certain commodities are highlighted, the broader point extends over almost everything right now. With not enough shipping containers in the right places, all goods will be affected until this issue can be rectified.
In short, no. The entire world is being subjected to the shipping container shortage. Because China is the leading manufacturing country in the world, the impact is particularly noticeable there. However, other areas are still feeling the impact.
Australia, for example, is facing a unique problem in accessing food-grade containers. In turn, this is affecting the shelf life of food products. Suppliers are being forced to readjust their distribution approach to ensure that food products remain fresh despite the impact the shortage is causing.
India, another exporting powerhouse, is dealing with similar issues. Textiles and clothing are a major export for India, but much of what they produce is waiting to be packed into containers and shipped out. Many countries rely on importing textiles from India and are in turn affected by this.
It’s not just an international phenomenon either. Domestically, the United States is seeing ocean freighters docked off the coast of places like California, patiently waiting for their turn to unload containers into the Port of Los Angeles and Long Beach. While these ships are sitting there, not yet unloaded, those full containers aren’t able to accommodate the next load of goods, meaning even more shipping containers are not being utilized in the global supply chain.
As you might expect, the container shortage is having a heavy influence on ocean & sea freight rates. The typical nature of supply and demand is at play here and causing rates to skyrocket in many cases.
Below are just some of the effects that have been seen in terms of changes in sea freight rates:
A side effect of ocean & sea freight rates increasing is an increase in air freight as well. As cargo planes resume their normal operations, supply and demand is taking its toll here as well. That is quite the knock-on effect for air freight as well, since the shipping costs for using this method of transport is already much higher than ocean freight during normal times.
Through it all, our team is here to help you. From procuring a container to ship your goods to clearing your shipment at the port and more, we’ll manage it all for you. With our unmatched customer service and dedication to our clients, we’ll help you sustain your supply chain through these challenges.
First, the good news: this shipping container shortage shouldn’t last forever. There are more than enough shipping containers in the world (estimated at 180 million) and more being built daily to accommodate the vast amount of products manufactured around the globe. So the most truthful, simple answer is this should be a temporary inconvenience.
The bad news — in regard to this specific issue — is that shipping containers need products to fill them, workers to load, ship and receive them, and transportation for the oftentimes long journey. Even though the outlook for all of these things is getting better as a whole, they still all hinge upon several different factors affected by COVID-19.
The restrictions imposed by cities, states and countries will impact how quickly and how much of this work can be done on a daily basis. As COVID-19 has shown during its existence, all it takes is an outbreak in one area of the globe for the ripples to be felt thousands of miles away.
That is one factor; the other is when the imbalance mentioned in an earlier section can be rectified. This is in both full containers left for days and even weeks just short of entering a port or even empty containers that were sitting in port not being utilized whatsoever. So while no one in the world can give an exact date on when the shortage will end, once COVID-19 and the shipping container imbalance are both leveled out, the availability of shipping containers should go up and the price increase associated with this shortage should come back down.
In the meantime, while there’s no magical fix, you can choose to find a logistics partner that was well-positioned before this shipping container shortage emerged. One that uses its various connections and resources to get you paired with the containers you need, where you need them. While those transportation units might cost more in the short term, your preferred partner should also strive to negotiate the best possible rate on your behalf.
Going this route can somewhat soften the blow of the rising expenses or limited availability of these essential parts of importing and exporting the products you need moved.
Dealing with the shipping container shortage can be a lot less painful when you choose to partner with USA Customs Clearance, powered by our sister companies AFC International and R+L Global Logistics. With our numerous connections to the overseas agents who have the shipping containers and our ability to dedicate one of our customs agents to handle your account, we’re the logical choice to help you navigate the uncertainty surrounding international freight shipping.
But if you think it’s just the shipping container shortage that USA Customs Clearance can help you handle — think again. Our experienced team of professionals know the ins and outs of not only procuring the containers and transportation for your goods, but also how to get them through the United States’ various ports of entry in the correct, most timely manner. Even if you just have some questions or want to learn how to more efficiently manage your importing business, we offer import and customs consulting sessions where you get uninterrupted 1-on-1 time to speak to a licensed broker.
Customs is just one facet of the overall scope of what we can provide to your business. If you need warehousing to store your products or even assistance with fulfilling orders, USA Customs Clearance does that too. If reverse logistics is an aspect you’d rather not deal with, we’ve got you covered.
So when you’re ready to not let the shipping container shortage slow down your importing business, give USA Customs Clearance a call at (855) 912-0406. We can give you a free quote and give you more information on how we can help you navigate the landscape of fewer containers currently being available.