By Wasana Nadeeshani Sellahewa
(Commonwealth) _ According to reports, the worldwide container transport sector is dealing with the polar opposite of the previous “one box is hard to locate” issue: there are too many empty containers to fit. A sluggish economy and diminishing demand from surplus inventories have resulted in a backlog of empty containers at ports and insufficient warehouse capacity to hold them all.
According to research by Container xChange, a container leasing and trading platform, the sector’s order-to-stock ratio has declined dramatically, indicating that the industry has huge stocks but declining demand, which has a knock-on impact at various levels of container logistics. One of the most visible difficulties is a scarcity of warehouse space, which will have a big influence on container repositioning and transportation in the future. While there was a container scarcity during the Covid epidemic, the world economy is currently dealing with the inverse problem: too many containers.
According to traders and shippers, the drop in worldwide consumer demand reflects a downward shift in spending appetites rather than an indication that the global economy is stabilizing after a frenzied post-lockdown consumption rush. Blank or canceled sailings are also on the rise, which is unusual as the year’s busiest spending season approaches.
While there was a container scarcity during the Covid epidemic, the world economy is currently dealing with the inverse problem: too many containers. In addition to declining freight prices, data suggests that container depots, which keep containers after they have been unloaded, are now filling up or are full.
It adds to the evidence of declining global demand and an approaching economic recession. According to traders and shippers, the drop in worldwide consumer demand reflects a downward shift in spending appetites rather than an indication that the global economy is stabilizing after a frenzied post-lockdown consumption rush. Andrea Monti, CEO of Italian container yard company Sogese, told Container xChange that his facilities are full. “Whatever was coming in and out of, say, our Milan depot is completely clogged. And the number of containers at the depots is expanding to the point that we are rejecting certain requests for depot service agreements.”
“We are currently unable to accept new clients for certain areas.” “What has happened today is that the cargo is ‘on time,’ and as a result, new orders will stall as firms adjust to more efficient turnaround times in maritime freight delivery.” To address overloaded and overflowing depots, ports such as the Port of Houston have begun charging fees for empty containers lying in terminals for more than seven days, according to Darin Miller, national marine manager at global claims management supplier Sedgwick.
Blank or canceled sailings are also on the rise, which is unusual as the year’s busiest spending season approaches. A blank sailing occurs when a shipping firm decides to skip a port or an entire leg of its itinerary in order to handle fluctuations in demand and capacity.
Drewry stated in its latest canceled sailings research that 14% of sailings on major container shipping routes were canceled between late November and early December.
Maersk, a major shipping company, cautioned in its third-quarter results last week that freight rates had peaked due to easing supply chain bottlenecks and dwindling demand. Investors can expect decreased ocean transportation earnings, according to the business.
Nearly 60% of the 200 freight forwarders, traders, and shippers surveyed by Container xChange last month said they were dealing with geopolitical, economic, and political threats that were putting downward pressure on consumption and hence demand for containers.
“Of course, there is a big dent in consumer demand, which results in reduced demand for freight and cargo, and so a commensurate dip in worldwide container demand.” Shippers are giving away containers to relieve congestion at depots, and many have resorted to blank sailings, according to Container xChange.
