Shipping Container Crisis: What it is and how it can affect you

November 9, 2021 by
Frank Calviño
Shipping Container Crisis
Miguel Á. Padriñán / Pexels

It’s early November and long lines of container ships are still huddle together in the crowded port of Los Angeles going so far as to even stretch from the cargo docks, into the San Pedro Bay. Inside them, goods and wares for the Christmas season mingle with tires, computer components, and even medicines. The so-called “Containergeddon” is breaking the supply chains for many businesses around the world. But, how did this happen? And more importantly, how could you avoid having your goods stuck in a cargo ship? 

The Shipping Container Crisis, a massive congestion of ships and cargo, has been happening for the better part of this year. Currently, over 376 shipping vessels are queuing off ports around the world, and although this might not seem as much, in practice it means that over 2.4 million containers are stuck onboard vessels waiting to berth. A majority of them are outside the ports of Los Angeles in the USA and Ningbo, one of China’s main ports. And the problem goes beyond the current goods and wares stuck inside these containers: The problem is the containers themselves. 

In the short term, these containers are not being used to move new goods due to not being able to unload their cargo. But worst, most of these containers cannot be used in the mid-term. Because no one is returning them to the factories and production centers that need them to send new goods and wares. The lack of containers has been so acute in the past months that shipping fees have skyrocketed to ten times their normal cost. 

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Currently sending one 40ft container from Asia to Europe costs $17,500 (£12,650), that’s 10 times the price of a year ago. 

And rightfully, you might ask, what the heck has happened here? The answer is convoluted and complex. Because the container crisis - already dubbed by some media as the Containergeddon - is a monster of many heads derived from a combination of mishappens, logistic miscalculations, and sometimes… just plain bad luck.    

How did the Shipping Container Crisis start?  

Asia was the first affected by the pandemic, and also the first to recover. This meant that China resumed exports earlier than the rest of the world, while other nations were - and still are - dealing with multiple prohibitions, a reduced workforce, and sometimes even minimal services in their ports or cargo handling areas.

As a consequence of this imbalance in the supply chain capabilities, during 2019 almost all of the remaining containers in Asia headed out to Europe and North America at the same time, but those containers did not return to Asia quickly enough. 

Massive workforce disruptions due to coronavirus restrictions in North America and Europe affected ports, cargo depots, and inland transport lines. In the UK the lorry drivers crisis even reached frontlines in the worldwide news media. 

What fueled the Shipping Container Crisis? 

Without adequate staffing, containers started to pile up. As borders tightened, customs became more complicated to clear as well, worsening congestion. In addition, there were rapid shifts in trade lane demands that were challenging for carriers to adapt to.  

There was no time to clear the very large backlog of containers with limited workers before more started arriving. And the whole thing just snowballed out of control: 

  • Currently, North America faces a 40% imbalance; which means that for every 100 containers that arrive only 40 are exported. 
  • 60 out of every 100 containers continue to accumulate, which is a staggering figure considering China to USA trade route sustains on average 900,000 TEUs (twenty-foot equivalent unit) per month. 
  • And it is also a high demand year. The current shipping volume is at record highs this quarter (up 23.3% compared to last year, according to Descartes Datamyne) It is expected to increase during the coming Christmas holidays.
Pixabay / Pexels

Be honest and be prepared 

With Black Friday / Cyber Monday and Christmas on the horizon, the best options for any business that could still define how to ship their goods will be to steer clear from any form of maritime transportation of goods or wares. But most likely, this late in the game, all business have already requested their shipments for the holiday season. And most likely, due to a sheer statistical fact, these products will be shipped. So, if your business is in this predicament - and you think that perhaps your goods could be inside one of those ships in the San Pedro Bay - we recommend you two things: 

  • Be honest with your clients:  Tell the truth about the status of your shipments. If they are delayed, tell it the moment you can confirm it. If you happen to know how much will be the delay, or when could your clients have an estimated date of arrival for their orders, tell it like it is. Do not lie. Do not sweeten the pill. Because it is preferable to bear with the brunt of their unhappiness than dealing with the scorn of their deception. The latter is far worst for your brand. 
  • Keep it professional and reliable with your clients: During this shipping crisis, your best weapon is to keep an open line of honest, professional, and direct communication with your clients. And how can you do this? Well, one of the best ways is by phone. Call centers give the brand the possibility of directly interacting with the clients. Listening to another human being is always more powerful than reading a cold email. Especially if your client is upset due to a delay in their order. You can try to communicate directly with your clients, or even better, hire the services of companies specialized in call center services such as Salesupply, who already know their way around handling unsatisfied clients and other complex situations. 

Logistics for 2022: Plan ahead and keep it dry  

Indeed, the container crisis will not last forever, but most experts believe that, at least until summer 2022, this shipping container crisis will linger on. In light of that scenario, the best course of action for any business will be to plan ahead and avoid sea trade, as much as possible. 

So far, air cargo seems the way to go, at least for the foreseeable future: airlines have decreased costs - many are compensating with cargo operations the lack of passengers - and their time schedules are still on the mark. 

Land transportation is another option, but you will need land routes connected to your production center. Also, if you are in Europe lorry drivers are having a crisis of their own,  and it’s not only happening in the UK.

All in all, your best course of action for 2022 is to work your inventory in advance: requesting and ordering all the goods you might need before the peaks of the holiday or sales seasons, and always remain informed about the current status of your shipping and logistics companies. 

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