08/25/2021
Why is there a shortage of shipping containers?
The problem isn’t that there aren’t enough shipping containers in the world; it’s that the containers are in the wrong spots. “The story of the last 16 months is a growing container imbalance,” said Harvard Business School professor W***y Shih. “What you see is a messy buildup of containers in places where they’re not supposed to be.”
The pandemic is the main cause of their disarray. When the initial outbreak of Covid-19 forced China and many of its neighbors into national lockdowns at the end of 2019, the region’s massive manufacturing sector shut down. Cargo ships that were already en route out of Asia dropped off hundreds of thousands of containers full of goods in ports across the Americas—but because of pandemic restrictions, they couldn’t load those containers back up with new products to send back to Asia. Instead, the containers piled up in ports and inland rail depots.
By the end of 2020, trade came roaring back. Unable to spend their money on in-person services, consumers dumped their disposable income into buying manufactured goods. Global supply chains sputtered back to life. But now overwhelmed ports—like California’s massive Los Angeles/Long Beach port—struggled to load and unload containers fast enough to keep up with the crush of ships waiting just offshore. Many ships, already running behind schedule because of congestion at the ports, decided to leave their empty containers behind rather than wait days to load them back onboard. As containers continued to pile up at major import centers, their supply dwindled at major export hubs.
To make matters worse, in March a 20,000-container cargo ship called the Ever Given lodged itself sideways in the Suez Canal. The six-day blockage further gummed up the circulation of containers and exacerbated the shortage. Brian Sondey—the CEO of Triton, a company that buys shipping containers from manufacturers and leases them to shipping companies—said on an April earnings call that the canal blockage was “the icing on the cake” of a terrible year for supply chains.