Shipping Container Shortages In China Crimp Exports To West

In September, we first noted that demand for ocean freight out of China was "leading to equipment shortages in Asia."

"The surge in volumes is leading to equipment shortages in Asia. Some shippers are paying premiums on top of spiking rates to guarantee containers and space. The imbalance is also putting pressure on overwhelmed US ports and importers to process and return empty containers quickly."

Spot container rates from China are soaring worldwide: 

Source: Freightos data in Refinitiv Eikon

Even with Chinese container manufacturers boosting capacity to keep up with demand - their efforts are still falling short. Mainly because distorted trader flows have resulted in record build-up in containers elsewhere. 

For instance, the Port of Los Angeles, the nation's top port, imported 3.5 containers for everyone it exported in October. There are currently 326,000 empty containers sitting at the port, according to shipping organization BIMCO.

One Chinese vendor with clients in the US said, "right now waiting for a container is two to four weeks. I still don't know if I will have a container or not." 

Shortages could persist well into the first quarter of 2021 as container manufacturers in China are booked through February. 

And what could this mean for US consumers? Well, this is what we said back in October: 

"Inventories are historically low. There is rising concern that companies will not be able to import and deliver enough goods to meet consumer demand during the holiday season."

Frederic Neumann, co-head of Asian Economics Research at HSBC, suspects this "unusually high demand for goods globally, which is likely to cool as we move into 2021 because of the (expected) service-led recovery, particularly in Western economies." 

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