Introduction: The Perfect Storm in Global Logistics

As we approach the end of 2020, the global logistics industry faces yet another significant challenge: a dramatic shortage of containers. This scarcity is causing ripple effects throughout supply chains worldwide, leading to spiking freight rates and shipment delays. The situation has arisen from a perfect storm of factors, including:

• Record shipping volumes
• Port congestion
• Insufficient chassis supplies
• COVID-19 related disruptions

For businesses relying on international trade, understanding the current landscape is crucial for navigating these turbulent waters. Let’s delve into the details of this equipment shortage and explore strategies to maintain supply chain resilience.

The Anatomy of the Container Shortage

The container shortage is most acute at Asian ports, particularly in China, Vietnam, and India. The problem is especially pronounced for 40-foot high cube and standard containers, which are the workhorses of global trade. In some cases, the availability of shipping space outstrips the availability of containers themselves, leading to the unusual situation of vessels sailing with empty slots despite high demand.

Root Causes of the Shortage

Several factors have contributed to the current equipment crisis:

1. Pandemic-induced demand fluctuations: Early 2020 saw high demand, followed by a sharp drop as the pandemic spread. This led carriers to believe they had a surplus of equipment, reducing urgency to order new containers.
2. Leasing opportunities vanished: The typical avenue of leasing additional containers became unavailable.
3. Natural attrition: Approximately 6-8% of containers are scrapped annually due to age and wear.
4. Resurgence in demand: As economic activity rebounded, the industry found itself with fewer available containers than at the start of the year.

Impact on Freight Rates and Shipping Routes

The equipment shortage has led to significant disparities in freight rates across different trade lanes. Carriers are prioritizing routes based on yield, resulting in varying impacts across regions. Factors influencing these decisions include:

• Container dwell time
• Export demand and pricing at destinations
• Port congestion levels
• Shipper contract types

Notable increases in rates are expected, particularly on routes to Europe, highlighting the global nature of this challenge.

The Ripple Effect: Port Congestion and Delays

The equipment shortage is not occurring in isolation. Many ports worldwide are experiencing severe congestion, including those in the United States, Canada, Australia, New Zealand, and the United Kingdom. This congestion is causing significant delays, with some vessels waiting more than 10 days for a berth. The result is a vicious cycle: containers that should be unloaded and returned to circulation are instead sitting idle on ships, exacerbating the equipment shortage.

In an attempt to reposition empty containers more quickly, some ocean carriers have taken drastic measures. They’ve begun refusing certain U.S. and EU export bookings, particularly those requiring additional free time or involving lengthy transit periods. Instead, these carriers are opting to ship empty containers back to Asia, prioritizing the repositioning of equipment over potential export revenue.

Strategies for Supply Chain Resilience

While the current situation poses significant challenges, businesses are not without options. Here are four strategies that can help keep supply chains moving in the face of equipment shortages:

1. Explore Alternative Container Types

While 40-foot containers are in short supply, other options may be more readily available:

• 20-foot containers: These are often easier to secure in most areas.
• 45-foot containers: A viable option in certain locations.
• Non-operating reefers (NORs): These are essentially dry reefer containers that can be used for non-refrigerated cargo.

By being flexible with container types, shippers can increase their chances of securing equipment and keeping goods moving.

2. Consider Larger Ports for Loading

Larger ports often have better equipment availability due to their position in shipping networks. Empty containers typically arrive at major hubs before being distributed to smaller ports via feeder vessels. Some examples of this strategy include:

• Choosing Shanghai over smaller Yangtze river ports like Nantong or Wuhu
• Opting for Shenzhen instead of Guangzhou or other Pearl River Delta ports

While this may require additional inland transportation, it could prove more reliable in securing equipment and space on vessels.

3. Utilize Premium Ocean Services

Some carriers and freight forwarders offer premium services that guarantee equipment availability at origin. While these services come at a higher cost, they can provide peace of mind and reliability in uncertain times. For businesses where timely delivery is critical, this option may be worth considering.

4. Leverage Less-than-Container Load (LCL) Shipping

LCL shipping allows multiple shippers to share container space, potentially providing more flexibility in equipment availability. Some freight forwarders offer premium guaranteed services on LCL shipments out of Asia, which can be an excellent option for smaller shipments or when full container space is unavailable.

The Role of Digital Logistics Platforms in Navigating Equipment Shortages

In these challenging times, digital logistics platforms like FreightAmigo can play a crucial role in helping businesses adapt and thrive. Here’s how our Digital Logistics Platform can support you in navigating the global equipment shortage:

1. Real-Time Visibility and Quotations

Our Digital Platform provides real-time visibility into equipment availability and freight rates across multiple carriers and routes. This allows you to quickly compare options and make informed decisions based on the latest market conditions.

2. Alternative Routing Suggestions

FreightAmigo’s intelligent algorithms can suggest alternative routing options, including the use of different ports or container types, helping you find creative solutions to equipment shortages.

3. LCL Consolidation Services

We offer robust LCL services, allowing you to take advantage of shared container space when full container loads are not available or economical.

4. Premium Service Options

Through our platform, you can access premium services that guarantee equipment availability, providing an extra layer of assurance for critical shipments.

5. Automated Documentation

Our Digital Logistics Solution streamlines the documentation process, reducing delays and ensuring all necessary paperwork is in order, even when dealing with non-standard shipping arrangements.

6. 24/7 Expert Support

Our team of logistics experts is available around the clock to help you navigate complex situations and find solutions to equipment shortage challenges.

Looking Ahead: The Future of Container Availability

While the current equipment shortage is severe, it’s not expected to last indefinitely. However, relief may not come immediately. Container manufacturers are reportedly overwhelmed with orders and are sold out through the beginning of 2021. This suggests that the tight equipment market may persist for several more months.

In the long term, the industry is likely to see increased investment in container production and more sophisticated equipment management strategies. Digital platforms and technologies will play an increasingly important role in optimizing container utilization and reducing inefficiencies in the global supply chain.

Conclusion: Embracing Agility and Digital Solutions

The global equipment shortage presents significant challenges for businesses involved in international trade. However, by understanding the situation and adopting flexible strategies, it’s possible to maintain supply chain resilience. Digital logistics platforms like FreightAmigo offer powerful tools and solutions to help navigate these turbulent times.

As we move forward, the ability to quickly adapt to changing market conditions and leverage digital technologies will be key to success in global logistics. By embracing these digital solutions and maintaining a flexible approach, businesses can not only weather the current storm but also position themselves for greater efficiency and resilience in the future.

At FreightAmigo, we’re committed to providing the Digital Logistics Solutions you need to thrive in this dynamic environment. From real-time visibility to expert support, we’re here to help you transform challenges into opportunities for growth and innovation in your supply chain operations.