October 20, 2021

Contain Yourself

If you have been on a flight recently which has passed near a major US port, and you were occupying a window seat, you were probably amazed by the view of thousands of container ships dotted around the surrounding ocean.

Except for China, ports all over the world are facing significant congestion. The attached article, Container Availability: From Shortage To Congestion, helps explain what has happened and the Container Availability Index. There are several reasons for the current shipping container shortage, but most of them point to the COVID-19 pandemic. When the pandemic took a stronghold in early 2020, the global supply chain experienced significant disruption. Manufacturing and transportation came to a screeching halt all across the world. However, various countries and regions of the world shut down at different times. This caused a massive imbalance in shipping container availability.

Outside of the repercussions of COVID-19, another notable event that contributed to the container shortage and caused shipping delays was the blockage of the Suez Canal. Thankfully, the blockage was removed, and the canal is now accessible. However, many shippers have now begun to look into alternatives to the Suez Canal. To learn more about this, check out our article Alternatives to the Suez Canal.

Since the pandemic, China has been recovering faster than many other countries, with its export figures rebounding spectacularly after the first half of 2020. Huge volumes of previously stranded containers started to leave Chinese ports. The normal cycle and availability of containers are completely imbalanced at present with China exporting much more than it is importing, consequently overloading the ports of major importing countries such as the U.S. and Europe.

The severe U.S. port congestion has critically impacted the supply chain flow. It has resulted in President Biden stepping in and requesting the ports to operate 27/7 until the situation is straightened out.

Did you know?
  • Over 500,000 containers are heading to the U.S. to be unloaded.
  • Shipping stocks and ETFs are up well over 100% growth for the year, with some as high as 400%.
  • Rates have gone from $2,800/container to over $20,000/container since the beginning of 2021.

The invention of the shipping container

The maiden voyage of the Ideal X and the birth of modern container shipping took place on April 26, 1956, which played a critical role in spurring the global economy.

Before 1956, the expense, risk, and frustration with ocean freight held back an expansion of the international economy. The break-bulk-loaded cargo was poorly secured and required a Tetris-like approach to handle diverse sizes of packages. Loading and unloading were particularly troublesome. Risks include delays, pilfering, damage and loss.

The modern shipping container has changed much more than one industry. It has radically transformed supply chains, fundamentally changed domestic and international economies across the world, and changed societies in the process – all the while driving trillions of dollars in annual trade. A short article from Smithsonian outlines the innovation and ultimate dominance of the shipping container.  

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