The Global Shipping Industry Is Facing A New Problem Too Many Containers

• While there was a shortage of containers at the height of the Covid pandemic, the global economy is now facing the opposite problem: too many containers. 
• Traders and shippers say the decline in global consumer demand is not a sign the global economy is normalizing after a frantic post-lockdown consumption rush but a downward shift in consumption appetites.  

• Blank or canceled sailings are also on the rise in what is usually the opposite, as the year’s biggest spending period approaches.

  
  

Turning away new clients

Italian container depot owner Sogese chief executive Andrea Monti told Container xChange his depots are full. 

“Whatever was coming in and out of, for instance, our Milan depot is quite stuck. And the container volume at the depots is increasing to an extent that we are returning some requests for depot service agreements.” 

“We are in a situation where we are not able to accept new clients for some locations.”

Monti told Container xChange that the peak season of goods shipments — as Christmas looms — “technically did not happen this year.” Retailers are cautious about the high level of inventory they have on hand, Monti said. 

“There is enough inventory with retailers,” Monti said. 

“What has happened now is that the cargo is ‘on time’ again and hence you’ll see a slowdown in new ordering as companies adjust to more efficient turnaround times in ocean freight delivery.”

To combat full and overflowing depots, ports such as the Port of Houston have started levying fees for empty containers sitting in terminals for more than seven days, according to global claims management provider Sedgwick’s national marine manager, Darin Miller.

“What many don’t realize is a lot of the time, the containers within the depots are empty,” he told CNBC.

“Often left sitting for weeks on end, the sheer number of containers on ships or at ports, leaves us with insufficient depot space which only exacerbates our ongoing supply chain crisis as it impacts container repositioning and movement.”

Consumers can expect retailers to offer discounts in order to clear inventory, Miller added.

The latest Drewry composite World Container Index — a key benchmark for container prices — has fallen again to $2,773 per 40-foot container. That’s 73% lower than the peak rate in September last year.

“We know already that the market is bearish on consumer demand because of multiple factors like recessionary fears and inflationary risks,” a Container xChange spokeswoman told CNBC. 

“So of course, there is a significant dent in consumer demand which then leads to less demand for freight and cargo, and therefore, a proportionate dent in container demand globally.”

Shippers are giving containers away to reduce crowding at depots while many have resorted to blank sailings, Container xChange added.