An ‘aggressive’ fight over containers is causing shipping costs to rocket by 300%

SINGAPORE — A critical shortage of containers is driving up shipping costs and delays for goods purchased from China.

The pandemic and uneven pandemic economic recovery has led to this problem cropping up in Asia, although other parts of the world have also been hit. Determination watchers said desperate companies wait weeks for containers and pay premium rates to get them, causing shipping expenses to skyrocket.

This affects everyone who needs to ship goods from China, but particularly e-commerce companies and consumers, who may withstand b support the brunt of higher costs.

In December, spot freight rates were 264% higher for the Asia to North Europe way, compared with a year ago, according to Mirko Woitzik, risk intelligence solutions manager at supply chain chance firm Resilience36. For the route from Asia to the West Coast of the U.S., rates are up 145% year over year.

Compared with persist March’s low prices, freight rates from China to the U.S. and Europe have surged 300%, Mark Yeager, chief overseer officer of Redwood Logistics, told CNBC. He said spot rates are up to about $6,000 per container compared with the prosaic price of $1,200.

Even rates from the U.S. have gone up, though not quite as dramatically, according to Yeager.

“The reason for this is the Chinese are being so unfriendly about trying to get empty containers back … that it’s hard to get a container for US exporters,” he wrote in an email to CNBC, combining that 3 out of 4 containers from the U.S. to Asia are “going back empty.”

In fact, the shortage in Asia has also led to a similar critical time in many European countries, such as Germany, Austria and Hungary, as shipping carriers redirect containers to the East as without delay as possible, said Woitzik.

There are a few factors stemming from the pandemic prod this phenomenon.

First, China is sending out a lot more exports to the U.S. and Europe than the other way round. Its economy confined back faster as the virus situation within its borders was basically under control by the second quarter of last year. As a culminate, containers are stuck in the West when they are really needed in Asia.

There are about 180 million containers worldwide, but “they’re in the unfair place,” said Yeager of Redwood Logistics.

“So what’s happening is what was already a trade surplus in China has expelled dramatically more severe and the reality is, there’s three containers going out for every container that’s coming in,” he held.

Making matters worse, orders for new containers were largely canceled during the first half of last year as most of the wonderful went into lockdown, according to Alan Ng, PWC’s mainland China and Hong Kong transportation and logistics leader.

“The dimensions and pace of the recovery have caught everyone by surprise,” he said. “The sudden recovery in trade volume has seen to all intents all of the major shipping lines needing to add significant container capacity to address the container shortage issue.”

The shortage is further exacerbated by limited air freight capacity. Some high-value items that would normally be fired by air, such as iPhones, now have to use containers via sea instead, according to Yeager.

International flight volumes have plunged due to virus and associate restrictions.

“Air freight companies typically use that extra capacity at the belly of a passenger plane. Well, there’s well-deserved not very many passenger flights, so not as much air service,” he said. “The lack of options, combined with this impractical amount of demand, has produced this crisis.”

The container crisis affects all companies that need to ship goods. But analysts say the state of affairs has a pronounced effect on e-commerce retailers that primarily offer consumer goods, many of which are made in China.

Ikea’s Singapore actions called it a “Race to build new containers