The humble shipping container has a new status in the Covid-19 pandemic: hot commodity. Shortages of the ribbed steel boxes that have plied the global economy for a half-century are plaguing transpacific routes in particular. The dearth is boosting the purchase price of new containers and lease rates by 50%, snarling port traffic, adding surcharges and slowing deliveries heading into the holidays. A surge in Chinese exports and robust consumer demand in the U.S. help explain the tightness, and major shipping liners like Hapag-Lloyd AG are scrambling to reposition their bigger 40-foot-long containers from less busy parts of the world. Nico Hecker, Hapag-Lloyd’s director of global container logistics, dubbed it a “black swan” moment.
The squeeze shows up in an indicator developed by Container xChange, an online platform based in Hamburg, Germany. The latest reading of its Container Availability Index was 0.04 for the 40-foot extra-tall boxes — the size popular for consumer products — in Los Angeles, while Shanghai slumped to 0.22. On a scale of zero to 1, the dividing line between surpluses and shortages is 0.5.
Boxed Out
Shipping container availability between the U.S. and China hits fresh lows
Source: Container xChange
Note: Above 0.5 indicates a surplus and below 0.5 indicates a deficit of containers. Blue and red lines refer to 40-foot high-cube containers
Dire predictions that global trade would collapse this year prompted container carriers to cancel sailings to underpin freight rates. Those forecasts proved far too pessimistic, though, and industry observers now say a sharp second-half rebound may mean container volumes for 2020 end up not far off levels reached in 2019. Economists have long debated whether international commerce lifts all economic boats, and many nowadays agree that it does, in theory at least. But the market for a commodity like shipping containers is very much a zero-sum game, where winners and losers are decided by who does and doesn’t have their hands on the available supply.