Container Shipping Lines are making record profits at the present time, but at whose expense?
It now costs six times the container rates than it did this time last year. A year ago shipping a container of goods from the Far East to the United States or Europe cost about £1,500 per container. The cost at the time of writing is more than £9,000 per container and the price is still rising.
We have to ask, “Why?”
Well the first thing is that for some reason demand for goods from the Far East has risen since the start of last year but only by about 5%.
The second reason is the shortage of space on the existing container ships fleets. This has led to premium prices in the second hand market of such vessels, the demand outstripping the supply. Ships that would have been due for recycling are being kept afloat by their owners as a result of the profit to be made from the current boom.
Thirdly there is a shortage of containers in the Far East to fill with the goods they are exporting to the United States and Europe. Whereas the container ships travelling to the United States and Europe are full of Far East exports, there is little cargo going on the return legs. There is a huge deficit between export and import with this region.
Also, the turnround at container ports has slowed down. In the United Kingdom some of the blame has been put on the shortage of lorry drivers and of Covid, but these seem to be the simple excuses for most things at the present time. Maersk decided to divert ships in and out of Felixstowe in October citing, “Congestion tied to a trucker shortage that’s clogging the flow of cargo boxes into and out of the country”. Many UK ports are full of empty containers waiting to be transported away.
The Port of Long Beach has at times seen over 70 large container ships anchored off waiting for the vessels stuck in port due to slow turnround.
Well, at least the container lines are making good profits and so are the exporters in China and other Far East countries, but the consumer is paying for it in the United States and Europe and we can expect to see inflation rising as a result.
These matters need to be sorted out and we need strong government intervention to stop the rise in these transport costs.