Slower container circulation cripples global shipping system

www.joc.com...

...because the slowdown in container circulation is due to multiple factors, including reduced labor productivity at warehouses and at marine terminals, “there are no silver bullets,” said veteran logistics consultant Gary Ferrulli. “It will take time, similar to previous labor disruptions, to clear the backlogs.”

The combined impact of reduced labor productivity and strong, sustained volume growth is clogging factories at origin and warehouses at destination, all of which contributes to the same bottom-line problem: reduced utilization of the container fleet overall. In other words, just when the system needed more capacity, the reduced circulation of containers led to less of it, and until normal container flow is restored fully, this will be a continuing drag on overall system capacity.

not exactly a topic to inspire much discussion but interesting I think.

the global economy is based on (ocean) shipping which depends on containers, those square metal boxes you see being pulled by tractor-trailers.

unclear how much impact this will have, especially for us ordinary folks.

anyone with any knowledge of?

I can tell you that in 2015 I could get a 40 foot container delivered for about half what it costs today.
I thought it was the cost of steel at first, but I'm pretty sure it's the lack of demand now. We literally shut down any company that didn't have multi billion dollar backing... Nation wide.

a reply to: ElGoobero

unclear how much impact this will have, especially for us ordinary folks.

Like just about everything, it is all about money.
The workers belong to unions trying to get more money out of the companies and the workers also want better wages. They are not productive since there is no fire under their asses and the whole supply chain suffers.

As for us ordinary folks? We will ultimately pay more for products and shipping, period.

originally posted by: ElGoobero
www.joc.com...

...because the slowdown in container circulation is due to multiple factors, including reduced labor productivity at warehouses and at marine terminals, “there are no silver bullets,” said veteran logistics consultant Gary Ferrulli. “It will take time, similar to previous labor disruptions, to clear the backlogs.”

The combined impact of reduced labor productivity and strong, sustained volume growth is clogging factories at origin and warehouses at destination, all of which contributes to the same bottom-line problem: reduced utilization of the container fleet overall. In other words, just when the system needed more capacity, the reduced circulation of containers led to less of it, and until normal container flow is restored fully, this will be a continuing drag on overall system capacity.

not exactly a topic to inspire much discussion but interesting I think.

the global economy is based on (ocean) shipping which depends on containers, those square metal boxes you see being pulled by tractor-trailers.

unclear how much impact this will have, especially for us ordinary folks.

anyone with any knowledge of?

I don't know a lot but in my particular industry, an increase in shipping costs and availability of overseas goods will change the dynamics forever. It's already been altered likely for a decade or more by COVID and restrictions. I would imagine means mores goods from Mexico, but those are notoriously not well made or consistently reliable. Domestically once companies get over a certain size, it's not cost-effective and quality costs a fortune.

Thats just my one niche industry I'd but there are dozens if not hundreds struggling to adapt as well.

a reply to: ElGoobero

This don’t help either..

I ordered an LG refrigerator on January 24 and it was delivered yesterday. 6 weeks.

I dunno, you know whats funny, in Canada, I have gotten a few packages lately, some audio vacuum tubes from Hong Kong, arrived in 12 days, a record from Germany..blew my mind it arrived in 8 days. The cd I ordered from the US, 2 months ago..no show.

Now, I have no doubt in general, there are issues.

originally posted by: vonclod
I dunno, you know whats funny, in Canada, I have gotten a few packages lately, some audio vacuum tubes from Hong Kong, arrived in 12 days, a record from Germany..blew my mind it arrived in 8 days. The cd I ordered from the US, 2 months ago..no show.

Now, I have no doubt in general, there are issues.

Smaller shipments likely come air freight. We have a company in Canada and they get their smaller shipments that way and do fine if they need 30 units or smaller. However, if they need 100 or more much longer process and progressively more and more expensive per unit. This is counterintuitive yet it happens at least in China it does.

For example, sometimes if you have a hot item and begin ordering it over and over again, suddenly prices can rise. As one of his partners in China said, sometimes it's based on where they get the raw materials from to produce your goods they see the increase and raise the price accordingly. Or those monitoring the shipping see increases and want to capitalize on it and there is graft and corruption at every level.

a reply to: ElGoobero

Is this why it took 12 days for my USPS priority mail box that I paid $18 to ship to get from NM to Ohio?

originally posted by: putnam6

originally posted by: vonclod
I dunno, you know whats funny, in Canada, I have gotten a few packages lately, some audio vacuum tubes from Hong Kong, arrived in 12 days, a record from Germany..blew my mind it arrived in 8 days. The cd I ordered from the US, 2 months ago..no show.

Now, I have no doubt in general, there are issues.

Smaller shipments likely come air freight. We have a company in Canada and they get their smaller shipments that way and do fine if they need 30 units or smaller. However, if they need 100 or more much longer process and progressively more and more expensive per unit. This is counterintuitive yet it happens at least in China it does.

For example, sometimes if you have a hot item and begin ordering it over and over again, suddenly prices can rise. As one of his partners in China said, sometimes it's based on where they get the raw materials from to produce your goods they see the increase and raise the price accordingly. Or those monitoring the shipping see increases and want to capitalize on it and there is graft and corruption at every level.

I believe you, thanks for the info, I just thought it was interesting, the shipping in all three cases was bare minimum..I have given up on my Bad Brains cd

A friend of mind is a broker for lawn grass, and a huge amount is grown in OR for over seas use. He told me like 4 days ago is they have a crises of grass just sitting in warehouses, and I asked is it because no one is buying? He said no, I have a huge number of buyers but there is no shipping container ships to ship it.

Funny how this comes up.

Maybe another reason to move industry away from China and the Far East back to the Americas as in North, Central and South.

I have heard that there are shipping containers in the 10,000s floating around in the sea. I wonder how hard would it be to salvage them?

a reply to: ElGoobero

Interesting analysis showing how container shipping rates have jumped recently -

www.economist.com...

Like you say, not the most sensational finding on the block, but one that flags just how delicate the economics are these days.

The problem isn't the amount of containers.
It's the amount of empties getting back to source.
It's not cost effective to ship empties back to the producing countries.

So a couple comments here...

I read an article just the other day talking about the massive backlog of container ships waiting to be unloaded off the coast of California. Of course, the context of the story was the "environmental impact" of all those ships anchored so closely together...not the economic implications of cargo not getting to buyers (of course) (flipping media!). Anyway, I think the problem is not so much lack of goods as it is bottlenecks in the overall system. I further posit this is somewhat by design to both drive up prices by driving down supply, as well as crippling the US economy.

Second, regarding empty containers; as I understand it they are rarely shipped back unless there is something to ship inside them. This is why you can find them available for sale practically everywhere for dirt cheap. (In fact, I've even been thinking about buying a couple and possibly burying them.) I'm sure there are probably some geographical considerations on whether they get sent back or not, but once they get inland any distance they become a throw-away commodity.

ETA - I also wrote a post recently discussing how serious this issue is, and how people don't understand it. It was a response to another posts (and I can't find it off hand). The issue is, most of these ships are designed for one thing and one thing only. Going to a different port is not an option unless it's Alaska or the NW seaboard. Ports like Texas and Florida are out because these ships are too big to go through the Panama Canal, and/or the Suez Canal. The only other way is around the Horn of Africa which adds thousands of miles to the routes and is extremely dangerous, and therefore not cost effective.

Bottom line; this is a huge issue for the foreseeable future. (Personally, I think Texas, Wyoming, Nevada, Idaho, Montana and possibly Utah should band together and Annex Kalifornia, banish their people to China (in empty cargo containers), and take the whole fooking place over...to fix the problem, but it's just a fantasy!)

originally posted by: Flyingclaydisk
So a couple comments here...


Second, regarding empty containers; as I understand it they are rarely shipped back unless there is something to ship inside them. This is why you can find them available for sale practically everywhere for dirt cheap. (In fact, I've even been thinking about buying a couple and possibly burying them.) I'm sure there are probably some geographical considerations on whether they get sent back or not, but once they get inland any distance they become a throw-away commodity.

there's a whole cult of people using old containers for emergency (or alternate) housing.
www.housebeautiful.com...
some pretty good stuff.

ETA - I also wrote a post recently discussing how serious this issue is, and how people don't understand it. It was a response to another posts (and I can't find it off hand). The issue is, most of these ships are designed for one thing and one thing only. Going to a different port is not an option unless it's Alaska or the NW seaboard. Ports like Texas and Florida are out because these ships are too big to go through the Panama Canal, and/or the Suez Canal. The only other way is around the Horn of Africa which adds thousands of miles to the routes and is extremely dangerous, and therefore not cost effective.

I wonder if there are Atlantic and Pacific containers then?

thanks for all the responses! I wondered if anyone would notice this. slow news day maybe.

originally posted by: Xtrozero
I have heard that there are shipping containers in the 10,000s floating around in the sea. I wonder how hard would it be to salvage them?

They won't float too long, they are pretty sealed at the doors, but there are vents near the top.

originally posted by: CharlesT
I ordered an LG refrigerator on January 24 and it was delivered yesterday. 6 weeks.

I ordered a Lazy Boy recliner last month. Said it would be here in 12 weeks.

a reply to: Bluntone22

youtu.be...

This popped up on YouTube.

How the weather doesn't help either.

a reply to: ElGoobero

Nice write. I jumped into market last June but I forgot about Dry Bulk and Container Shippers. Here's an article from last year on the Containers along with a tweet on Friday 05Mar2021.

ALWAYS DO YOU OWN RESEARCH JUST DON'T JUMP IN


Container rates are on fire. How can you invest in that?


Mintzmyer

J Mintzmyer @mintzmyer · Mar 5

Huge buying opportunity in #containership #shipping stocks which are somehow caught up in the $TSLA $ARKK meltdown today. Latest rates just posted, another nice jump for 1-year Panamax rates to $33k/day, 13 year high! This is $NMCI $NMM bread and butter. $ATCO $DAC $GSL $MPCC.

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