By jwr |

And it is now expected to last well into 2022...

August 2021: According to one of the experts "If you want to get something for your family for Christmas, start shopping now."

In 2020 we all knew there were problems with shipments from Corona-struck China, but we didn't see this one coming.

Seafreight rates from Asia to Europe have skyrocketed, three to five-fold, in some cases even higher,at end of 2020 and first quarter 2021. If you can get your hands on a container at all!

Apparently a very large number of sea-freight containers is piling up in the Americas and Europe - with UK one of the main focus points. What's piling up there leads to shortage in the rest of the world, foremost all of Asia.

What happened? Apparently, those who are analyzing the situation have different explanations. But a few things are clear: Coronavirus in China (now mainly recovered), Coronavirus in Europe and Americas (in severe second waves), Brexit (red tape), Coronavirus in Brazil (steel shortage), errors in judgement, systemic failure in unusual conditions.

There are about 180 million containers worldwide, generally a sufficient number. Explanations of the current container shortage, in a nutshell:

With a chronic (known) imbalance of more goods going from China to Europe and Americas than the other way around, Chinese shippers usually carry empty containers back to China.

The Corona crisis, initially in China, significantly lowered Chinese production, resulting in much lower volume of seafreight to Europe and the Americas. So, shipping companies decided to take ships offline. The cost of container shipping rose, to the extent that it became too expensive to ship the empty containers back to China, especially with the prospect of prolonged Chinese lockdown. Many containers remained in Europe and the Americas. When Corona hit the west, causing production and export stops there, those containers remained idle there.

With this situation ongoing, China's recovery then sent more full containers for its order backlog, including large amounts of PPE, to western ports, aggravating the container pile-up there further. Adding Brexit customs, warehousing and IT problems in the UK, the largest numbers of empty and full containers are now stuck there (causing further carrier-imposed surcharges for the UK). On top of that, the processes of clearing full containers and releasing them as empty containers experiences Corona related slowdowns, globally. On top of that, the production of steel to make new containers is said to be delayed in Corona-hit Brazil. The whole problem becomes global as shipping companies are now said to be snatching away empty containers scheduled to ship goods from Europe/Americas to Asia, to ship empty to Asia in order to benefit from the sky-high Asia to Europe/Americas rates.

On 23 March super container ship Ever Given got stuck across the Suez canal, all shipping was blocked. It was freed 6 days later. Guess when it finally arrived in Rotterdam? Three months later, on 29 July. Why? Litigation about who would pay the damages...

The second question is, who profits from these sky-high prices? Apparently, it's the very shipping companies that caused the crisis in the first place. Maersk, the largest container shipper in the world, reported a quarterly profit that is 96 percent higher than a year earlier: $ 2.2 billion. Double profit, while everyone else suffers. Their competitors are also thriving: the German Hapag-Lloyd HLAG posted 66 percent more profit in 2020, at One in Japan the profit in the first months went to 1.6 billion, from 131 million dollars previously. To be continued well into mid 2021.

Update: make that 2022. And now, in 2023, the rates for container shipping are one-and-a-half times the early 2020 rates.

It's not a pretty picture.

While some are enriching themselves, governments, public, business and family finances risk bankruptcy while paying to keep Corona-hit economies, businesses and employment afloat, while in fact the structural solution is easy: switch off the banking system's loan payment and interest system for a year or two, better yet, put a temporary moratorium on all loan payments, and ban loan interest and financial gambling (futures, derivatives, etc) permanently.

Of course 1,000 of the missing containers went into Doha's World Cup 974 Stadium... How is that for eco-friendly?