Global News Container availability plentiful in Asia despite destination backlogs

With hundreds of thousands of containers sitting idle in North America and Europe — on ships waiting at anchor, at marine terminals and railheads, and parked outside distribution centers — conditions would seem ripe for a container shortage to materialize in Asia at the outset of the annual holiday shipping season.

But that is not happening.

Despite well over 100 ships waiting off US ports and highly elevated numbers of import containers sitting on marine terminals, multiple ocean carriers, importers, and forwarders told JOC.com over the past week that shippers are having few, if any, difficulties obtaining container equipment in China and other points of origin in Asia. They say the reason is two-fold: a softening of demand combined with record production of new containers last year.

“There is less friction for us at origin than I have seen at any time over the past 18 months,” said the logistics director for a large importer.

Indeed, the contrast between origin and destination in terms of container equipment fluidity right now could not be greater. At the Port of Los Angeles, there are currently about 29,000 containers waiting for a train — a figure executive director Gene Seroka said last week should be “more in the 9,000 range.” The average dwell time is 7.5 days, a wait that ought to be closer to two days. At Savannah on Monday, there were 73,246 containers on the Garden City terminal versus an average of 46,700 in pre-pandemic 2019. One ocean carrier told JOC.com that the average time across the US between when a container is released to an importer to when it is returned empty is 50 percent longer than earlier this year. All of which points to the idling of large numbers of containers in the US, with the situation in Europe not much better.

But why do containers seem fully available at origin? One reason is a significant ramp up in container manufacturing last year. According to maritime consultancy Drewry, the global pool of ocean shipping containers grew 13 percent last year to almost 50 million TEU, three times the prior growth trend. “This reflected lessors and ocean carriers ordering a record number of containers, while retiring fewer aging units, as congestion across global supply chains meant containers were an estimated 15 percent to 20 percent less productive than in pre-COVID-19 times,” Drewry said. The analyst said it estimates that as many as 6 million TEU of surplus containers now exist in the global equipment pool, high by historic standards.

According to Triton, the largest container lessor, new container production exceeded 5 million TEU last year, more than double the number produced in 2019 or 2020 and the highest number since at least 2010. Post-lockdown surge in box ordering According to Container xChange, a tech platform for container trading and leasing, the surge in container ordering resulted from shortages that emerged after the surge in post-lockdown spending. “With the rise in demand, congestion at ports increased and the container capacity was held up for a considerably long period of time,” Christian Roeloffs, co-founder and CEO said in a statement. “This led to the panic ordering of new boxes at record levels.”

“The oversupply situation does not come as a surprise because the average container prices and leasing rates have been declining globally since September-October 2021,” Roeloffs added.

“The carriers have ordered a lot of new equipment in the past two years, so they have caught up with supply,” said Patrick Fay, co-founder and CEO of Boston-based forwarder BOC International. “Carriers have also tightened their detention and demurrage terms, so that has also helped trim the equipment shortage.”

The availability of containers at origin comes as conditions in North America are deteriorating. The crimp in normal circulatory flow of equipment in North America is so severe that one ocean carrier told JOC.com it was unable to dispatch a ship from LA-Long Beach back to Asia because of a shortage of empty containers with which to fully load the ship for seaworthiness. Another carrier confirmed issues with in-gating empty containers onto marine terminals. Shortages in Asia could emerge Sources are not ruling out the potential for container shortages to emerge in Asia if the backups continue in North America.

“I agree there are basically no equipment issues at origin today, but as we see congestion starting to ramp up stateside, and if volumes do not decrease significantly, the continued strain and longer dwell of equipment may have an effect down the road,” said James Caradonna, general manager for Americas pricing at M+R Spedag Group/MCL Multi Container Line, Inc.

According to one ocean carrier executive, a container shortage at origin “could be the next issue to emerge,” due to inconsistencies among carriers in returning empty equipment to Asia and contracting for new equipment.

A big part of the reason for the availability of containers is the slowdown in bookings out of Asia that has many wondering what kind of peak season the market is in store for this year.

“The booking options to the USWC are the best we have seen in many months, but the USEC is still very strong and we see cargo getting delayed and occasionally rolled,” Fay said. “These market conditions are now allowing us to use many carriers and services, enabling us to help our customers with creative solutions to deal with the various labor threats and [West Coast] rail congestion.”