Ongoing trouble on the high seas: container shortages, port congestion continue

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The shortage of containers in Asia, which we reported in detail last month, has been ongoing, as has the continuation of port congestion across the U.K. and Northern Europe.

Combined, these problems are having a profound impact on sea freight services.

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Shipping lines navigate choppy waters

A number of shipping lines are suspending all freight bookings from Asia to Europe until the end of the month.

Heavy and sustained demand has overwhelmed the container supply chain, creating chronic shortages in equipment and driving rates up. Further increases are likely in January.

So far this year, sea freight rates have doubled on the Asia to European routes, an unprecedented rise that has caught importers off guard as they have incurred some substantial losses just as businesses are struggling to recover from or meet the ongoing demands of the COVID-19 pandemic.

Temporary booking halt

The strong demand for containers out of Asia and accumulated backlog over the last weeks has prompted the shipping lines announcement of a temporary booking stop on the Asia-North Europe trade for at least weeks 49, 50 and 51.

The severe shortage of empty containers in Asian origin ports has been building since September. The spike in volume from China to the U.S. caused container availability in Asia to drop 37% to a level that is almost 50% lower year over year, The Lodestar reports.

Port problems

Specific port problems, rather than resolving gradually as hoped, seem to have gotten worse.

The situation at Felixstowe, London Gateway and Southampton has worsened over the past 10 weeks. High import volumes, the approaching Brexit deadline and peak season preparations, as well as a lack of storage space and yard congestion, all contributed to the worsening situation.

Volumes have picked up following the relaxation of COVID-19 restrictions and in the run-up to Christmas. Weekly import volumes are over 30% above average levels at Felixstowe from early September. Importers are seeking to replenish stock levels that dropped during the initial lockdown phase, one leading U.K. forwarder reports.

Looking to 2021

With the likely chaos of a fast-approaching Brexit and a shortage of containers in Asia expected to persist well into 2021, the situation is not likely to get any better in January.

Rates are expected to stay elevated and could go even higher. The Asia-Pacific routes to North America are suffering similar disruption due to the lack of containers. Importers are facing increased ocean freight costs, which are expected to likewise persist into next year.

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