by Emmy Nguyen Emmy Nguyen No Comments

These days container shortages have become a serious problem in the logistics industries. This problem is not just associated with logistics industries, it also unpacks manufacturers trading companies, and retail businesses. What is the cause of “Container Shortage” and why are we unable to get space on vessels? The answer is Covid 19, now I will explain in detail why Covid 19 is severely damaging the Logistics Industry.

     1. Reduction of vessels number

Reduction of vessels number

From the beginning of 2020 coronavirus is raging around the world and then from march and April 2020, many countries entered lockdown. When they entered lockdown their economic activities were restricted which also affected the people who work outside, the number of port laborers was reduced. This caused the speed of cargo handling to reduce and some factories temporarily closed which caused a large number of containers to be stopped at the port. As the movement of cargo was limited, shipping lines reduced the number of ships to stabilize the cost. They would make losses if they continue to send vessels while they have no cargo, make container shortage therefore they reduce the number of vessels to maintain the ocean free.

2. Surging Demand of China and Christmas Business in North Ameria

Most countries limited economic activities from April until June. From July World economic activities started to recover. Coronavirus started in china which led to them setting Covid plans at an early stage. They have now managed to control coronavirus. The infection rate in China is lower than in japan also due to the support from government funding Chinese factories were able to recover their production at an early stage. When Chinese factories started to produce it restarted exporting activities this increased exports from China. China was able to manage the coronavirus and they were able to restart their production at their factories earlier than other countries. This encouraged other businesses to try to produce in china which increased export from china.

Normally from September large volumes of cargos are sent to North America for Christmas businesses. Large volumes of cargo are shipped from China to North America there are approximately 900 000 by 40 feet containers sent from China to North America per month. In addition to this, China has a long vacation called National day of the people’s republic of china in October. This leads to them trying to send cargo before the holiday starts. This drastically increases the volume of export from china as well.

3. Delay in collecting empty containers

Also as shipping lines were reducing the number of vessels they were not able to collect empty containers so Container Shortage. Many exporters in Vietnam, Thailand, Malaysia,.. are limited to export to China by shipping lines. On occasion, they were even refused to book large volumes of export. The shipping lines were controlling the number of containers exported to China to solve the issue of container shortages. They are also reducing free time and detention periods. For example, some shipping lines have reduced their free time in Japan from 14 to 7 days. They established a system to quickly collect containers, unload cargo, and return the containers.

4. Lack of manpower and chassis in North Ameria

Currently, there is a lack of manpower and chassis due to coronavirus in North America they collect containers at the port and take them inland. However, the containers do not return for a long time, the cause of delay is due to manpower issues at the consignee also there is a shortage of drivers, which means they are unable to bring the containers back quickly.

Container freight rates to US west coast

Container freight rates to US west coast

Therefore there is a lack of chassis to collect containers from the port. More containers are stopped at the port. It normally takes one to two days to return empty containers and chassis. However, currently, they may not return for over a week. These problems are repeatedly happening to allow the situation to worsen. The reason for the delay was explained as a lack of drivers and chassis. This led to them collecting the containers two weeks after the arrival of the ship. These reasons are causing a lack of containers. Sea shipment costs for North America have increased dramatically. Normal ocean freight to Los Angeles port which is referred to as the entrance of

Asia normally costs no more than 2000$ for a 40-feet container, however, some shipping lines have increased the charge to nearly 5000$.

Shipping lines are engaged in a price war in 2016 this resulted in a major Korean shipping line filing for bankruptcy as there is a lack of containers. It is understandable that they increased ocean freight. According to media reports, this problem will be solved in February or March next year. However, there’s nothing to guarantee exactly when it will end, depending on the impact of coronavirus it may slow down cargo handling even more.

This is the first time we have encountered the impact of container transportation under such a pandemic, Container Shortage like that. Many exporters are facing serious problems with booking. Not only the freight is skyrocketed but there are also not enough spaces.

Since Credibility and Speed are 2 out of our 6 core values, FOMEX Group has been always at its best effort to supply our partner’s sufficient goods at the fastest. Besides, we also consult our partners with the latest market information and forecast so that they can be more proactive in stock and business planning. Please reach out to us at any time for more information and proper advice!


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