Most of our Chinese customers are back at work according to emails we received last week. Right when the Coronavirus has hitten Europe, China slowly seems to finally gain more control of the situation. What happened? For the first time, there is almost no container equipment in Europe and Northern America due to the carriers blank sailings. They want to be ready in China, waiting for the economy to go up again. Alphaliner estimates that about 60% of the Asia-Europe sailings have been withdrawn. Now as the virus gets worse in Europe and the US, equipment turnaround speed puts even more stress on shipping lines. As most countries in Europe have shut-down operations, container inspections, handling or stuffing – every part of the transport chain that requires human interaction – are heavily delayed.
Looking at Shanghai (CNSHA) we can see direct impact of the Coronavirus as the delta between the curves for container availability 2019 and 2020 grows over the week, starting from the beginning of the year. Last year at the same time, the CAx value for 40DCs was 0.29 indicating a deficit of containers, now a value of 0.88 in 2020 is indicating a huge surplus. The opposite situation in Los Angeles, a location that is famous for its surplus of equipment has now difficulties. Instead of having a bigger surplus (last year’s values for 40DCs range from 0.52 to 0.99 for 40DCs) the port is at an all-time low with a CAx value of 0.08 for 40DCs in March 2020.
Equipment imbalances and empty container repositioning is a problem that accounts for $20 billion for the shipping industry annually, but due to the Coronavirus it got even worse for most carriers or NVOs. Especially in the US or Europe, companies are starting to experience frequent equipment shortages in several areas in the USA. This is a direct result of the ocean carriers’ blank sailing strategy which is triggered by the low/ no volumes on the major shipping routes. Based on ocean carriers comments and the Container Availability Index (CAx), it is expected that this trend will continue, if not only worsen.
The CAx forecasts supply and demand in container logistics for most of the biggest port locations and up to three weeks. It takes millions of containers tracked through the Container xChange online platform into account and shows that compared to 2019, containers are piling up in China. It shows values of 0.47 (20DCs), 0.94 (40DCs) and 0.71 (40HCs) for week 10 in Shanghai, China – a plus of 47% compared to week 10 last year.
Usually, it’s the other way around, but now we have a deficit of containers in North America and Europe, CAx values for Hamburg, Germany dropped by 33% to 0.07 (40HCs), 0.45 (40DCs) and 0.47 (20DCs). For Los Angeles, US, with CAx values of 0.25 (20DCs), 0.19 (40DCs) and 0.11 (40HCs) and Chicago, US with 0.02 (20DCs), 0.01 (40 DCs) and 0.11 (40HCs) it’s even worse and the forecast says it will not get better soon.
Use SOC Containers to avoid Demurrage & Detention charges
As a result of the blank sailings, it forces mainly NVOs to hold empty equipment longer than usual, incurring more demurrage & detention charges as well as What is a chassis? Chassis, in freight & logistics, refers to a skeleton framework with wheels on it used to move containers. It is also called intermodal chassis or container chassis. Similar to ... More fees or repositioning equipment, where available, in addition to possible interchange fees. Additional surcharges and costs include Peak Season Surcharges (What is peak season surcharge? Peak Season Surcharge, or PSS, is the additional charge imposed on the base freight rate or regular shipping fees when there is high demand in the supply chain network. ... More), Container Imbalance Surcharge (CIS), Congestion Surcharges (CNS) and General Rate Increase (GRI). Feel free to use the CAx to find out about the equipment availability in your port location.
A solution for how the problem can be tackled is the neutral online platform Container xChange. It lets NVOs identify partners for repositioning or find SOC containers to completely avoid demurrage & detention charges initially because shippers owned containers have just to be returned at the partner’s depot. Just type in your locations and find new partners in more than 2500 locations online. For more information about xChange, get in touch with us below and schedule a free demo now.