High Shipping Cargo Volumes Cause Bottleneck

The disruption to shipping lines during the lockdown of March 2020 has led to record costs, according to a report in The Financial Times. The article says that the cost of shipping goods from China to Europe has quadrupled in the past eight weeks, owing to a shortage of empty containers.

The problems stem back to the sudden disruption to global trade in the first half of 2020, when hundreds of freight trips were cancelled. This led to thousands of empty containers becoming stranded in Europe and the US. When trade picked up again in the autumn, there was a huge shortage of containers in Asia.

John Butler, president of the World Shipping Council, said: “We’ve gone from a tremendous drop-off to getting whipsawed into historically high cargo volumes and there’s now more than terminals can efficiently handle.”

The competition among shippers for available containers has led to a sharp increase in rates. The resurgence of coronavirus in China is exacerbating the problem, which it was first hoped could be resolved in a few weeks. An increased demand for goods imported from China, fuelled by an online shopping boom, has also worsened the situation.

The BBC reports that freight forwarders are calling for shipping lines to add more ships to help ease the backlog in China. According to the article, the World Shipping Council has responded by saying carriers are using all available capacity.

Small to medium businesses who are less able to absorb the extra costs are being affected the most. Ultimately, they will have to charge their customers much higher prices or face closure. The situation is made worse by the extra paperwork caused by Brexit, which is also leading to extra delays at British ports, and also ongoing huge PPE shipments.

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