Last updated: 13 October, 2023
Container imbalance is a serious challenge in the shipping industry. It costs you exuberant container imbalance charges (CIC charges) and in many cases huge monetary loss to your business. Find out more about this issue, and how you can contribute to a stabilized container flow and save money in this blog.
The severe conditions of the coronavirus pandemic have brought container imbalance into the limelight. In order for the global supply chain to function, containers need to flow easily and effectively from point A to point B. Supply must meet demand, after all. However, the COVID-19 pandemic had quite a crippling effect on the economy. The result? A gross imbalance between capacity and demand.
In simpler terms, it basically means that you have cargo to ship but there are no containers available to carry your goods. One way that you can combat the imbalance is by leasing SOC containers for one-way moves. However, finding SOCs might not be as easy, especially when there are imbalances in the industry.
Container xChange is here to lend a helping hand. On our leasing platform, you can get SOC containers easily from certified companies. Our public search below will give you a head start already.
Simply choose ‘I want to use containers’, type in your pickup and drop off locations, and hit search. Within a few seconds, you’ll see a list of all available containers in your preferred location. Choose any deal you are interested in and get in touch with the supplier directly. Try now!
What is container imbalance in the shipping industry?
An imbalance in containers occurs when there’s a surplus of cargo to be shipped and a lack of containers to ship them in. When goods are carried from one point to another in shipping containers, the same box is used to carry goods back to the country of origin, so when the import matches the export, no imbalance occurs. However, when a country has nothing to return, the containers remain empty at the port, and this is when the problem begins.
Eventually, the cargo will start to build up and the port simply doesn’t have the capacity for it. Containers are left full in this instance and don’t return back to service, which further contributes to the imbalance.
However, by leasing shipper-owned containers, you’ll have greater control over container management, so you can avoid imbalances through efficient redistribution, strategic planning, and market flexibility. With Container xChange, you can easily streamline your container assets and contribute to a more balanced container supply chain by leasing SOCs on our platform. Reach out to one of our experts today to get a demo and join the revolution today!
What causes container imbalance?
There are five main causes, check them out below:
| High shipping rates | It’s always good to explore methods to lower your shipping expenses. Paying high rates causes severe financial strain for your business. An easy solution to this is to make smaller shipments or choose a destination where the rates aren’t as expensive. |
| Space issues | containers don’t always have the capacity to fit the cargo they require to ship and this leads to containers being left at the port because they’re too heavy to move or are overfilled. One way to alleviate this is to consider shipping less cargo or choosing the right container type and size. |
| Using one freight forwarder for multiple destinations | If you use a single freight forwarder to ship goods to multiple locations/destinations, it means they’ll pass through multiple vendors which means it’s available to more customers. The vendor increases the cost, so it’s important to use multiple freight forwarders to create a balance in your shipment. |
| Container shortage | Container shortage directly links to container imbalance. Shortage of containers means more cargo piling up at ports or warehouses, which naturally creates this problem. |
| Cargo weight | If cargo is too light or too heavy, it tends to move at a much slower pace and causes delays during the loading and unloading stage. Port and shipment delays also contribute to the issue. |
2 ways to avoid container imbalance
Here are the two main solutions and the most effective ways to reduce the impact of this type of imbalance: Digitalization and researching market forecasts. Since the issue is linked to container shortage and empty container repositioning, it’s wise to start there.
| Digitalization | Research market forecasts |
| Digitalization acts as a simple solution to many issues within the logistics industry — container imbalance is one of them. Digitization allows you to handle your container operations online. Track and stay up to date with where and how your box is moving so you can plan better and know exactly which destinations will have a surplus of empty containers for your usage. | You have to be as informed as possible within the shipping industry. The market fluctuates so often and it’s important to know what these changes are and how they affect you. Research market forecasts as often as possible so you can avoid delays and port congestion. |
Another way to combat imbalances is to consider leasing SOC containers. However, finding one might not be as simple as you think. But with Container xChange you can find the SOC you’re looking for! Our digital platform allows you to have access to a global network of trustworthy partners. So you’ll be sure to find the best deals easily. Reach out to one of our seasoned professionals and start your contribution to a more sustainable shipping industry today!
Now that you’re all clued up on the different ways to curb imbalances, let’s have a look at the current state of this problem in 2023:
Container imbalance: Effect on the shipping industry 2023
When manufacturers had no choice but to store commodities during COVID-19, it meant suppliers couldn’t fill orders in on time, therefore disrupting the cash flow. This lead to orders being unpaid, and the cycle continued.
Container imbalance causes prices to surge which makes importers and exporters second guess shipment due to affordability and they have to wait until a cheaper box is available — another way the container flow is affected.
As COVID-19 restrictions ease up, other problems posed as a threat to the industry. Below are some issues the industry is facing in 2023:
US West Coast tension
The most pressing concern at the current moment is the US West Coast tension. This has caused some disruption to the US ports. Ongoing negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) has caused many uncertainties, so, shippers have grown weary and were forced to move their cargo to other US ports. This resulted in massive congestion in the East and Gulf Coast ports in 2022. Although things have improved since then, it’s still in the industry’s best interest to avoid the same scale of congestion in 2023. West Coast ports are responsible for 50% of the country’s imports, as well as 12% of the US GDP. This means that container imbalance poses a huge threat to this region.
Imbalances in the EU
Many containers are currently idle in Europe due to the decline in customer confidence. Excess containers across Europe lead to heavy congestion and a shortage of space at ports, warehouses and storage yards.
Excess inventory in retail
Many people around the world have cut down on expenses as inflation rises due to the effects of the pandemic. As a result, sellers and retailers are now trying to get rid of their inventory before ordering any new shipments. This is mainly due to the fact that customers are more likely to be cautious with their money. The results? Containers aren’t moving as easily as they should be, which interrupts the flow.
That’s a wrap on the issues in 2023. But did you know that it’s also highly important to stay up to date with container availability when it comes to imbalances. This is where the Container Availability Index (CAx) comes into play. Let’s have a look at why and how CAx contributes to managing imbalance issues better:
Importance of CAx for container imbalance
The Container Availability Index (CAx) is a metric that provides real-time insights into the supply and demand of containers in a specific region or trade route. It measures the availability of containers by assessing the ratio between the number of containers in circulation and the current demand for containers. This index is crucial to the industry as it helps stakeholders anticipate and address imbalances.
Imbalances occur when there is a significant disparity between container supply and demand. The Container Availability Index plays a vital role in managing this imbalance by offering valuable information on container shortages or surpluses. By monitoring the index, shipping companies, logistics providers, and importers/exporters can proactively plan and adjust their operations. It enables them to address potential container shortages, allocate resources effectively, and optimize container distribution.
How does it work?
Container xChange collects data from our extensive global network of container owners, leasing companies, and other stakeholders. This data encompasses information on container availability, location, and demand.
When the CAx value is 0.5, the number of containers filled with cargo leaving and entering a port in a week is the same. If the CAx value is above 0.5, it means that more containers with cargo enter the port, while if it’s below 0.5, more containers with cargo leave the port.
Low CAx values observed consistently for several weeks indicate a shortage of containers, while high CAx values over an extended period imply that there is an excess of containers at a specific port.
Container Availability Index news
Recently, CAx has shown a massive increase in the number of inbound containers at Indian ports from the start of 2023, right up to May 2023. The CAx value has remained steadily above 0.80 in the last month and has continued to maintain a value over 0.75 since January 2023.
India has seen a decline in demand for outbound containers, which ultimately results in a higher CAx value overall. The graph below depicts the CAx value for 40ft containers in three Indian ports between 2022 and 2023:
Container xChange is constantly exploring new and innovative ways to streamline your container logistics operations. CAx is one of the many features we’ve implemented on our platform as a way to simplify container operations. If you’d like to dive in-depth into CAx values at various ports then download a free copy of our latest container logistics report here.
Now that you’re up to date on CAx, we’ll dive into empty container repositioning and the charges connected to imbalances next:
Empty container repositioning and CIC charges
Empty container repositioning is a major financial drawback for container owners. European and American ports experience a high surplus of empty containers, and at the same time, Asian ports face severe shortages.
There are 170 million containers being shipped globally; of that, 50 million of them are empty. This is caused by imbalances within the industry linked to trade, company specifics, and structural and time imbalances. It’s safe to say that empty container repositioning is a big problem in the maritime world. This is due to things such as:
- Trade inefficiencies
- Revenue generation
- Lease and manufacturing costs
- Headhaul volume
- Unreliable forecasting
Sharing equipment globally is a popular way of avoiding empty container repositioning and so does container interchanges.
Container interchanges reduce the number of empty containers through partnerships with other carriers. Container xChange is the biggest platform for container interchanges with more than 1500+ shipping companies. By allowing both container users and owners to find partners that move their containers from surplus to deficit locations, we can alleviate the costs of empty container repositioning.
What are container imbalance charges (CIC charges)?
CIC charges in shipping are costs to compensate for the repositioning of empty containers between countries where you’ll find a trade imbalance. When there’s no use for a container that’s been previously imported to those specific countries, it remains empty, and so there’s a cost involved to reposition the empty container.
It’s pretty costly to move your empty containers to and from different ports. Container imbalance causes around 10 percent of the global container assets to be empty. They also account for around 20.5 percent of port handlings around the world. It costs the industry between $15 – 20 billion per year to reposition all these empty containers.
Relocating the containers also include extra costs for drayage, transshipping at the terminal, and empty warehousing when the containers wait to be relocated. All these are expenses for an empty container, that doesn’t give much of a return. That’s one of the reasons why using these empty boxes as one-way containers have become more and more popular.
Container imbalance surcharge: Who should pay?
A shipping line or carrier may impose this surcharge on either the consigneeWhat is a consignee? When transporting freight (by ocean, air, or land), there are two parties involved — one who is shipping and the other who is receiving the freight. The recipient of the goods b... More or the shipper in order to cover the costs of managing such imbalances
The container imbalance surcharge should be settled by the local consigneeWhat is a consignee? When transporting freight (by ocean, air, or land), there are two parties involved — one who is shipping and the other who is receiving the freight. The recipient of the goods b... More if this party creates the imbalance by receiving more containers than they’re shipping.
On the other hand, if the shipper is sending out more containers than they’re receiving, they will need to fit the bill.
Remember that it’s always important to review the terms of conditions of your shipping contract, in order to make sure you know exactly what extra charges you could be liable for.
Avoid CIC by leasing SOC containers on Container xChange
You’ve heard of a SOC container before and probably already know how it benefits you, but in case you might have forgotten, let’s recap quickly:
Finding containers can be a time-consuming ordeal especially when the market is facing container imbalance. There are several processes for finding and using SOC shipments. Such as background checks, negotiating terms, and producing legal agreements.
SOC gives you more independence, control, and flexibility, but you want to be sure of who you’re partnering up with. Are they reliable and trustworthy? Container xChange makes the process of finding partners to lease SOC containers easy, so you can avoid CIC and lease SOCs on our platform from trustworthy, vetted partners.
Track containers in near real-time, manage bookings and work efficiently from one website. Avoid high carrier rates, demurrage, and detention charges, and have the power to choose exactly which containers you need. You also have the option to choose the condition your box comes in. You’ll have access to more than 1500 carriers, leasing companies, and traders that have available SOCs listed in more than 2500 locations worldwide when you join Container xChange.
Adapting to an industry that’s constantly changing is easier with SOC containers. Have the freedom to plan your shipments and transportation according to your needs. Avoid CIC charges by getting access to hundreds of new SOC partners on Container xChange. Click the banner below to start your journey to efficient logistics operations today!
Container imbalance: Common FAQs
What is container imbalance?
Container imbalance refers to a situation in which there is an uneven distribution of containers across different locations or shipping routes. It occurs when there's an excess of containers in one area or a shortage in another, leading to inefficiencies in the global shipping industry.
What causes container imbalance?
Container imbalance can be caused by various factors, including fluctuations in global trade patterns, imbalanced import-export ratios between different countries or regions, changes in supply and demand dynamics, logistical challenges, and delays in container repositioning.
What are the effects of container imbalance on the shipping industry?
Container imbalance can have several impacts on the shipping industry. It can result in increased costs for shipping lines, as they need to reposition empty containers to areas where they are in demand. It can also lead to delays in cargo transportation, reduced efficiency, and increased freight rates.
