Sea change

Containers are the building blocks of global trade. And at the moment, shippers cannot get enough of them. Surging demand for goods and a shortage of empty containers at Asian ports have sent container-shipping costs rocketing. Since November the cost of shipping a 40-foot container from Asia to Europe has risen more than three-fold, from around $2,200 to over $7,900. The price of shipping goods from North America to Asia has doubled. The Freightos Baltic Index, a measure of container-freight rates in 12 important maritime lanes, has increased from $2,200 to $4,000 per container.

A year ago the container-shipping industry was struggling to stay afloat. After governments around the world imposed lockdowns to curb the spread of the coronavirus, global trade plunged, forcing firms to idle vessels and cancel sailings. When demand picked up again in the second half of the year, and factories returned to full production, thousands of containers were stranded in European and American ports, rather than in Asian ones where they were needed. As Western consumers cancelled their holidays, and used the savings to buy smartphones, laptops and other goods, exporters were left scrambling for containers, leading to a spike in container-shipping rates.

Even as exporters in China face a shortage of containers, boxes are piling up elsewhere. Many ports are struggling with congestion, leading to bottlenecks, delays and rising costs. Carriers are falling behind schedule. According to SeaIntelligence, a maritime consultancy, just 50.1% of container vessels arrived on time in November, the lowest share since the firm began tracking the measure in 2011. Reduced air-freight capacity has made the market tighter still. With fewer passenger flights taking off, cargo that might normally have been shipped in aeroplanes’ holds must now fight for space on container ships.

As coronavirus vaccines are rolled out, and pandemic restrictions are lifted, consumers will start diverting their spending to restaurants, hotels and other services again, relieving pressure on goods exporters. Until then, the container crunch may well endure.

This article is from our Graphic detail section.