26 Oct Growing Challenge of Empty Container Returns Adds To US Supply Chain Disruption
The inevitable consequence of the first-half inventory buildup that continues to force dozens of ships to wait off major US East Coast ports is that the containers that carried those goods must eventually be unloaded and sent back empty to the ports, amplifying the disruption already being experienced.
The challenge of returning empty containers is compounded by the absence of any material incentive to return them to Asia, as there is currently an excess of available containers. This is attributable to the doubling of new containers manufactured last year to more than 5 million TEU, in response to the spike in pandemic demand for containerised goods.
Without the need for containers, shippers are reticent to spend time repositioning them whilst they are simultaneously trying to catch up on operations that are running behind schedule, resulting in an untenable situation for terminals, importers and exporters, trucking companies, and the port itself.
In addition, a worsening trade imbalance has exacerbated the surge of empties at US ports as import volumes surge whilst export volumes stagnate. This excess is also being reflected in container pricing. According to Container xChange, used container prices in China are down 50 percent from a year ago, while one-way leasing rates for containers from China to the US dropped 17 percent from June to July.
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Rachael Budd & The Transolve Global Team
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