During the COVID-19 pandemic, the seaborne freight moving industry experienced a shortage of useable shipping containers. Now that the globe is moving away from the restrictions of the pandemic, the industry is facing the opposite problem – too many of them.
With freight rates falling, container storage facilities are filling up with unused shipping containers, leaving little room for storing other new shipping containers.
Container depot owners are turning away containers as their depots are full.
In a recent article, the CEO of Container xChange commented that there are too many containers and insufficient space at depots worldwide for storage. As more containers are released into the market, this issue will likely not get any better soon.
A depot owner in Milan spoke to Container xChange and said, “we are in a situation where we cannot accept new clients for some locations.”
Some Ports are Coming up with Ways of Reducing the Number of Empty Containers They Hold
To combat overflowing depots, some ports have started charging fees for empty containers that sit at terminals for periods over seven days. In the past, containers would sit for weeks, which has caused additional inventory issues. This causes other supply chain issues as empty containers take up valuable space in a shipyard depot.
Consumers are benefiting from this overflow of shipping containers, with retailers lowering their prices, hoping their containers can be cleared so those storage fees can be avoided. According to the World Container Index, the current average value or price for the contents of a 40-foot container stands at $2,773, which is a 73 percent drop over a single calendar year.
Adding to the container issue is the number of blank or canceled sailings, which is a number that is on the rise. Traditionally, as the holiday season approaches, the number of empty or canceled sailings fall. A blank sailing occurs when a shipping company decides to skip an entire leg of its usual schedule because of falling demands.
Because of the Fall in Container Demand, 60 Percent of Freight Companies are Experiencing Downturns
In a survey of 200 freight traders, shippers, and forwarders spoken to by Container xChange in October 2022, 120 of them said that they were experiencing issues with economic and political risks. These risks have caused downturns in container demand because of reduced consumption pressures.
With consumer demand waning in some sectors due to inflation and other recession-related fears, freight and cargo demand will likely be unpredictable for the foreseeable future. While it’s difficult to predict the future related to shipping constraints throughout the supply chain, companies must stay nimble to weather whatever fragile economic climate we may be entering.
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