Increased Demand Across Asia Leads to Container Shortage

The COVID-19 pandemic disrupted trade activities since its emergence. Thereby, now there is a surge in demand across Asia. This has led to container shortages and an increase in prices.

Equipment Shortages in Asian Ports

Robust demand led to equipment shortages in many Asian ports. In turn, this led to the increase of container prices in the trans-pacific route. Usually, the prices fall back in October due to the demand slowing down. Conversely, the prices aren’t going down any time soon this year due to the shortage of containers in the continent.

Further, the unequal import-export ratio and the supply chain disruptions due to the pandemic is the primary reason for the increase in the prices. For example, Hapag Lloyd, one of the largest container carriers announced rate rises of $960 and $1,200 for its 20 foot and 40-foot containers from the 15th of October.

Chinese Government Intervenes to Control Prices

To optimize equipment supply, Hapag-Lloyd announced that the “assigned depots would only release empty containers eight days prior the estimated time of arrival (ETA) of the intended sailing.” Following this, many carriers have introduced restrictions on the release of empty containers before the shipment as well. Along with this, many carriers are hiking other charges as well, such as terminal handling fees in Europe and that has angered many. They feel that the carriers are taking advantage of the current situation. However, According to The Loadstar’s sources, the line is working very hard to resolve issues in Asia.

On a positive note, the Chinese government called for a meeting with the carriers on September 11th. This was to discuss the unprecedented rise in trans-pacific rates. Further, the government advised them to cancel blank sailings. Along with this, they asked carriers to transfer the benefits of the low price of oil to the customers.

Situation in India

The container traders from India are also facing many issues. Currently, blank sailings, equipment shortages and the backlog of bookings are some significant problems. Further, the lack of a workforce is also causing many issues. This month’s carriers called back 24% of the capacity on the India-Far East trade. Due to this, 23 out of 120 scheduled sailings were blanked.

Mr Sadanand Mishra, manager of a leading shipping company, mentions that there is a gap in demand and supply due to the infectious coronavirus pandemic. Owing to the epidemic, the domestic market drastically dropped. As a result, the production was hit with the imports lowered and using the locally available raw material. Thus, ultimately disrupting the supply chain. He also mentions that the lack of workforce due to the pandemic has impacted operations. Also, the turn around timing of the cargo due to congestion problems and space scarcity is delaying the shipments. Therefore, space issues, labour issues and the gap between demand and supply are impacting the shipping industry in India.

In all, the COVID-19 pandemic has disrupted the whole trade momentum of the world. By undertaking a few measures, the traders are trying to resolve the container shortage issue.

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