While a shortage of shipping containers, yes, the physical containers themselves, was a major issue during the COVID-19 pandemic, the industry now faces a new problem. Too many shipping containers.
The Situation
During the heights of the COVID-19 pandemic, a drastic uptick in consumer behavior created a shortage of shipping containers. Now, as the global economy looks towards 2023, the opposite issue has popped up – there are too many shipping containers. Container Depots, the yards in which shipping containers sit after they’ve been emptied, are filling up worldwide if they aren’t already full.
There are many factors as to why this is, but perhaps the largest reason being the significant decrease in consumer demand in the face of inflation and global uncertainty. These signs all point to an impending economic slowdown, as this isn’t expected to be a lull following a post-lockdown consumption frenzy. Rather, it’s another sign pointing towards a downward shift in consumer appetite globally.
The Outlook
“There is just not enough depot space to accommodate all the containers. With the further release of container inventory into the market, for example from the disposal of leasing fleets, there will be added pressure on depots in the coming months,” container logistics expert Christian Roeloffs stated in an industry update several weeks ago. Roeloffs is the chief executive of Container xChange, and online data resource for the shipping industry.
Added pressure on Container Depots is the last thing they need right now. Italian Container Depot owner, Andrea Monti, has told Container xChange his depots are filling fast. “Whatever was coming in and out of, for instance, our Milan depot is quite stuck. And the container volume at the depots is increasing to an extent that we are returning some requests for depot service agreements. We are in a situation where we are not able to accept new clients for some locations.”
Monti went on to say that peak season largely passed his depots by this year, with retailers skeptical of keeping too much inventory on hand. One factor for this is the expedited turnaround time for shipments, which is down significantly from the heights of the pandemic. Companies and retailers alike are now adjusting to this new normal.
The Result
As a direct cause of this consumer behavior, blank sailings are skyrocketing. A blank sail, simply put, is a canceled sailing. Blank sailings are a strategy used by freight forwarders to redistribute fleets, equipment, and the likes by skipping ports and/or legs of voyages.
Analysis of recent weeks between late November and early December show that the 14% of sailings across major shipping routes have been canceled. A stark difference from what is normally the largest spending period of the year. It’s become such an issue that some shippers have simply resorted to giving containers away.
