Asia container shortage intensifies

The lack of container equipment at Asian origins is so severe that carriers are leaving export cargo on the quay, to ship empty containers back from Europe and the United States.

The container shortages are so acute, particularly at the Chinese ports of Qingdao, Xiamen, Ningbo, and Shanghai, that some vessels are leaving Asia without full loads because there is not enough equipment to be found. Imports from China have been exceptionally strong since late June when the economy began to reopen from the first COVID-19 lockdown.

Carriers have been charging surcharges and promoting premium services during the continuing peak season, to guarantee equipment, but the increasing inability of carriers to position equipment negates the purpose of the surcharge.

And while the lack of equipment is a massive issue, it is increasingly challenging to secure space aboard individual vessels.

Metro’s commercial team work closely with our partners at origin to secure bookings, locate equipment and ensure the container is loaded onto the ship on schedule.

We continue to see other shippers shut-out regularly by the carriers which is why, since the start of the peak season spike, we have been urging our customers to give us in advance their forecasts, ideally two or three weeks in advance, so that we can secure their shipment bookings and equipment.

To try and maximise the revenue opportunity from Asia, carriers are doing everything they can to return empty containers in the fastest possible time. Different lines are adopting different methods, including reducing free storage, denying export bookings to quickly turn the empty containers, and repositioning empty containers to Asia from other trade lanes.

Carriers are no longer blanking trans-Pacific sailings to adjust capacity to demand because they need all the space they can get to exploit this extended peak season, but shippers complain that they reduced capacity too much, leading to record-high rates, has prompted the Federal Maritime Commission to monitor blank sailings, utilisation of equipment, and revenue trends.

The FMC’s latest move follows its decision to investigate whether carriers are in violation of its Shipping Act and detention fee investigation, amid reports that some carriers are threatening high charges for failure to return empty containers on time, even in cases where congestion has made it difficult or impossible. 

Our trade association, BIFA said it was joining a call from The International Federation of Freight Forwarders Associations (FIATA) for governments to support the key considerations laid out by the FMC in its Final Rule on Demurrage and Detention, adopted in May following a six-year investigation.

Metro are now intensely involved in negotiations with partner shipping lines considering all market conditions, the current situation and carrier bullish approach. We would encourage and recommend that you provide us with your 2021 forecasts now so that we can look to tie down a deal for 2021 that has a fixed validity and allows consistency in pricing and budgetary needs. Please call Ian Barnes and/ or Grant Liddell for latest market details and planning for The New Year.