2020 was a completely atypical year for all sectors of the economy and for society in general, the reasons are well known. The Covid-19 pandemic has changed markets and of course Comex has experienced many changes - in processes and also in inputs and materials. And one of the big problems today is the lack of 40HC containers.
So, would 2020 also be the year of the container crisis in the world?
But first, for those of you who are unfamiliar, we explain:
The 40HC Container is a type of container that has a larger internal and external space than the others. It is suitable for the transportation of large quantities of goods and also for the loading of customized projects - due to its different height and width.
Its internal measurements are: 12,032 mm long X 2,352 mm wide X 2,698 mm high, with a cubic capacity of 76m.
External measurements: 12.192 m long X 2.438 m wide X 2.895 me high, with a maximum capacity of 26.330 kg.
But why are we witnessing this crisis anyway? This post is to explain what is really happening.
Read below the translated article, originally posted on the FreightWaves Portal:
"It seems containers are the new gold these days," wondered Nerijus Poskus, Flexport's global sea freight chief.
"Container availability in Asia is extremely limited at the moment," added the head of Flexport Ocean Freight North America, Jan Hinz. "This is causing many difficulties for our customers and the transportation industry as a whole. We've heard reports from Asia that some ships are sailing with open slots simply because there is no equipment - although there is demand to fill the containers," Hinz said.
Flexport's announcements reflect comments from Nico Hecker, director of global container logistics at Hapag-Lloyd.
"We are currently seeing a' black swan 'and experiencing the biggest increase in demand [for containers] of 40 feet, after one of the biggest drops in demand of all time," Hecker said. "Almost three out of four containers in our 40-foot fleet are currently deployed ... and therefore unavailable."
The transpacific market to the east is going through a record-breaking bullish run. California's port system is doubling, with delays tying even more containers and making the lack of equipment even worse. Imports appear to remain at peak levels until at least this month (November), and probably in the first quarter of 2021, due to vacation loads and stock replenishment.
But shippers cannot take all their cargo to the US if the ships do not have enough empty boxes in China.
"It's not really a shortage. It's more because the containers are out of position," Steve Ferreira, founder of Ocean Audit, told FreightWaves.
"Because of strong growth in places like Africa and South America - smaller businesses - containers are out of position. They have to follow another step, to a neutral place like the USA, where they are gathered and sent back to Asia".
Lars Jensen, CEO of SeaIntelligence Consulting, told FreightWaves:
"It's a confluence of two events. One is clearly the strong increase in demand growth. The other is the delayed effect of many blank trips [cancelled] a few months ago. The blank trips led to a serious interruption in the normal flow of repatriation of empty containers. The impact of this is being felt as demand increases".
According to Peter Friedmann, executive director of the Agriculture Transportation Coalition, "ocean carriers offer major importers into the US virtually unlimited time off. While US exporters typically have three to five days of free time, the so-called 'champion' accounts - the big-box importers - are holding their containers, without detention penalty, for weeks. Many of the containers are not open and empty. They are being used for storage. He said this practice "contributes significantly" to today's tightening of crate capacity.
A Maersk spokesman told FreightWaves: "We rented all the equipment we could find on the market during July-October. But now the leasing market has dried up. There are no more containers available on the market. ”
In the meantime, the box manufacturers blow the limit for at least four and a half months. Normally, it can take six to eight weeks from contract to delivery. Not today. Factories are depleted in the first quarter of 2021 and even the second quarter of 2020.
At the last CAI International (NYSE: CAI) box equipment rental conference call, CEO Tim Page said, "The factories aren't really quoting [price offers]. All plants are not quoting for much of the second quarter's deliveries. It's hard to ask when you can't get a quote. ”
Regarding the new boxes requested earlier, Page said, "customers today are basically waiting for the ink to dry to pick them up.
For freight carriers, it does not matter if there are not enough boxes because they have not yet been built or because they are in South America when they need to be in China.
For carriers, container availability is a zero-sum game. It may make sense for them to employ scarcer resources on trade routes, where they reap the highest returns.
An example of exchanging scarce container capacity between the trade routes involves Hapag-Lloyd.
U.S. farming groups have criticized the carrier since last month for choosing to transport empty boxes from America to Asia instead of loading export goods.
Critics claim the carrier is doing this because it can make more money by getting the empty containers to China faster and returning them with high-value exports to the US.
A Hapag-Lloyd spokesman told FreightWaves: "We continue to serve agricultural exporters in the U.S. Due to some significant bottlenecks in the supply chain ... we have temporarily reduced our export volume. This is mainly impacting businesses that consume many days of containers at source and destination, but is not limited to agricultural products. We are taking steps to overcome these restrictions, but anticipate that the challenges will persist for some months. ”
If there are not enough HC (High Cubes) containers of 12 meters to meet US imports, there are other options.
According to Hapag-Lloyd, "the 40-foot refrigerated containers that have been shut down - so-called non-operational reefers - are [being] filled with dry products such as fabrics, shoes and electronics. The carrier predicted that "20- and 45-foot containers are likely to be the next types offered as replacements for 40-foot containers.
"From the point of view of availability, these are cubes about [12 meters] high," Hinz said. "So we're asking our customers to be flexible. If there are no HCs, use the [standard] 40-foot container. Or a 20-foot container. See the non-operational reefers. Or even increase the frequency and start sending LCL [less than the container cargo] to continue and not to accumulate".
Looking ahead, Hinz advised: "As we move into the RFQ season next year, we expect to see an important role in contract negotiations around equipment warranties, pressure on free time and high interest among ocean carriers in trade routes with a high response timeof equipment. That's something to look out for."
As we have seen, 2021 will come with the challenge of the lack of 40HC Containers, and as you read just above, we are coming into RFQ season. So, register your e-mail in the form below and we will soon send you a complete and practical model of RFQ.
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