Empty shipping containers are crowding shipping ports around the world and creating an unexpected bottleneck in the global supply chain. Not long ago, the shipping industry was facing a shortage of steel containers, but a downturn in demand for goods and a looming economic slowdown have turned that shortage into a surplus, according to CNBC.
The ubiquitous steel boxes are now taking up precious space at container depots, which are either filling up or already full. The containers themselves are sitting empty amid a decline in global consumer demand per CNBC. It’s an unusual situation, especially this close to a usually frantic period for the industry; the holiday shopping season is just a couple of weeks away, and in past years, this is around the time shipments would ramp up as stores replenish their shelves and inventories.
But the opposite is happening this year, and retailers are reporting that they already have enough inventory. Many stores are reluctant to order more goods than they have on hand, which is good for buyers looking forward to discounts that sellers will inevitably resort to in order to clear out inventory. But it’s not so good for global freight: traders and shippers are giving containers away to reduce crowding at some ports, and are skipping stops at other ports altogether.
It’s not clear exactly what “giving containers away” means, but it’s not very likely that it actually means ports are handing out containers. Sorry, tiny home enthusiasts and Tron: Legacy fans. It probably has more to do with giving away container space for cargo. The dramatic drop in container costs isn’t far from free container space as it is, since prices are down by 73 percent compared to last year’s peak: rates are now at $2,773 per 40-foot container.
And even though it’s still early in November, 14 percent of stops scheduled through the beginning of December have already been cancelled along major shipping routes. This is known as blank sailings, as CNBC explains, and is one of the ways shippers and ports are hoping to avoid heaping even more empty containers at the depots where they wind up after being unloaded. There’s just nothing to unload lately, nor anything to load them up with as buyers shy away from stores. Other ports, including the Port of Houston, are now charging fees for empty containers left at depots for longer than seven days.
Global shipping giant Maersk says that freight rates peaked during the global pandemic and are now steadily declining. The shipping major warned investors that profits are going to fall in the next coming weeks. Who knows? Maybe at some point there’ll be so many of these boxes at ports that we can all start planning our free tiny home projects modeled after Flynn’s container home.