Global Container Shortage: Investigating the causes and effects
Global container shortages were a universal issue highlighted during the post-COVID-19 pandemic. As we know, shipping containers are the backbone of the shipping industry, and their demand and supply need to be balanced to avoid extra costs and decrease supply chain efficiency.
The main reason for global container shortage is supply chain disruptions due to the reduced demand and increased supply of shipping containers in the market.
This article will help you understand the causes, effects, and strategies for minimizing the impact of the global container shortage on the shipping industry.
What is global container shortage?
Global container shortage, as the name implies, is the lower availability of shipping containers than the demand in the market. This has affected domestic and global trade practices as shipping containers are the source of transportation.
There is a fact that before COVID-19, this was not a significant concern, as it was managed easily, but after the arrival of the pandemic, it disrupted the whole supply chain due to fluctuations in demand and supply.
What causes the global container shortage?
When lockdown was declared, the shipments were closed. After some time, when the lockdown was removed, the ports were crowded with consignments, but fewer containers were available to fulfill the consignments. More reasons like this lead to container shortage; let’s explore those causes in brief:
- Overcrowded ports: During lockdown, there were stay-at-home orders. As a result, there was less workforce at the container ports, but there were products that needed to be transferred, which led to delays in fulfilling the orders and difficulty loading the goods. Consequently, the ports were filled with goods waiting to be loaded and ships awaiting unloading. Therefore, a container shortage was caused as all the containers were preoccupied.
- Decrease in the number of containers: In the initial phase of the pandemic, a decline in international shipping trade led to less demand for containers, so there was less production of containers. After the removal of the lockdown, the demand for containers increased, but less supply led to container shortages.
- Supply chain disruptions: Disruptions in supply chain management also lead to container shortages, like the blockage in the Suez Canal that blocked transportation routes; then comes the Chinese New Year on 12 February, which slows down container production.
- Trade imbalances: After the pandemic’s unexpected arrival, customers’ behavior and demand changed, leading to irregular international trade and trade imbalances, consequently causing container shortages.
How does the container shortage affect global trade?
- Slowing the pace of trade: The container shortage has decreased the pace of trade, as there are no containers available in the market to transfer goods from one place to another.
- Impacted inflation: The container shortage increased prices for shipping and port logistics, and ultimately, the expense would be passed on to the consumers.
- Disruptions to global trade: The two most essential economies in global trade, Russia and the USA, were also devastated after the coronavirus pandemic. Trade was disrupted, container shipping rates were high, demand increased, and no containers could resolve the problem.
- Atmospherical effect: Long waiting lines of ships increased emissions. Due to the need to transport the goods as soon as possible, shippers chased non-sustainable, cheap ways to load or unload the goods, negatively affecting the environment.
- Delayed shipments: A container shortage delays the shipment’s delivery to the consignee, making that particular product unavailable in that area. Import-export delays decrease customers’ reliability in companies.
- Effect on agriculture: Farmers in the US and India struggle to export their products, which leads to food waste.
What solutions are being proposed for the container shortage?
To cope with the problem of container shortage, many steps can be implemented, so let’s discuss these solutions that will combat the problem of container shortage:
Using alternatives: To deal with the issue of container shortage, you can also use the alternative of shipping storage containers such as tricons, bicons, and quadcons which are a little smaller than your standard containers but are cost-efficient.
Mitigating container shortages with a 3PL partner: Leverage 3PL in logistics to shorten the supply chain. This will decrease costs and suggest the most efficient routes in collaboration with reliable couriers and good storage options.
Aiding technology in shipping: Using artificial technologies in land, air, or maritime shipping will help mitigate the problem of container shortages. If you have a proper track record of the shipments, then you will be able to adjust them according to the requirements at that moment in time. For instance, supply chain management software provides available data analytics.
Optimize your bookings: Properly aligned bookings of containers will help you overcome the problem of a container shortage. You can do this by booking your shipments in advance, approximately 4 weeks, and avoid cancellation or delays. This will help the port management authorities properly manage your shipments and allow them time to arrange the containers until then.
Container shortages are a global problem that was highlighted after the COVID-19 pandemic. This issue has disrupted trade and the supply chain, leading to economic problems in many countries. Investigate the root causes and analyze the measures you can use to mitigate the effect of container shortages. This global problem is huge but can be resolved with specific preventive measures.
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