With peak season in full swing, 40' High Cube (40'HC) containers are very hard to come by. Importers should choose alternative container sizes when possible to avoid delays and ensure their products ship on time.
Where in the world is my empty container?!
As we've mentioned in our last few UWL Freight Market Updates, equipment shortages in Asia are becoming a huge issue for just about all of the ocean carriers. The problem seems to be the worst for importers looking to move 40'HC containers.
If you've found yourself wondering, "Where are all the 40'HCs and why is there a shortage?" This article is for you. We'll take a look at the current market conditions, why there is an equipment shortage in Asia, and what you can do about it.
Current Market Conditions: Empty Equipment Status of Ocean Carriers in Asia
Some carriers are more heavily impacted by shortages than others, however, 40'HC containers are in short supply across the board.
Carriers are having difficulty releasing equipment, even for Freight All Kinds (FAK) bookings. In some cases, even with space confirmed and booking confirmation released, there can be challenges retrieving an empty container. Unsuccessful empty pickup can then lead to the space needing to be re-booked, causing up to two-week delays at times.
In addition, since they are in such high demand, carriers are prioritizing the release of 40'HCs to premium FAK bookings, meaning shippers with long term, fixed rate contracts may find it much more difficult to secure that particular size container. However, premium services are also affected by the shortage, and at times, there is no equipment available even for premium bookings.
These challenges could continue for months to come.
Why is there an equipment shortage?
Many factors across the supply chain are contributing to the equipment shortage in Asia. As you know, earlier in the year, COVID-19 lockdowns brought the world economy to a screeching halt. Consumers panicked and stocked up on supplies, causing stores to run out of toilet paper and other essential products. With their shelves bare, once economies reopened in July and August, importers in the U.S. and Europe rushed to restock their inventories.
40'HQs easily became the equipment of choice for shippers moving medical supplies, personal protective equipment (PPE) and other essential items because the added height allows them to stuff an extra 10-15% of cargo inside versus the standard 40' container. The sudden push to get product out of China created a two-week backlog of containers at Asian ports and ate up much of the available 40' equipment.
Trade imbalances from the U.S. and Europe to Asia, coupled with a supply chain slow down due to COVID's impact on warehouse labor availability, left many containers stuck in the States. Ocean carriers responded by cutting back on free time in an effort to push importers to return equipment as soon as possible. However, as reported in the JOC, truckers in key ports like Los Angeles and Long Beach have had difficulty getting appointments to return those empties.
Returning from inland facilities to the Ports is just one leg of an empty container's journey. To get back to Asia, the empty container has to make it on a ship and then back to the right port. Even this is proving to be a challenge for ocean carriers trying to reposition their equipment. Typhoons, fog, and inclement weather in the Pacific have further compounded the situation, causing vessels to skip ports and contributing to the shortages.
The equipment problem has gotten so bad, it's now impacting exporters of agricultural goods. Hapag-Lloyd recently announced it is suspending overseas ag container shipments from North America for the foreseeable future, a painful blow for U.S. ag shippers during their key export season. The move comes as carriers rush to reposition empty containers back to Asia.
So what is an importer to do?
Keeping your freight flowing is our #1 priority. To avoid delays in the current environment, our advice is to be open to alternative equipment sizes.
Most carriers still have standard 40' General Purpose (40'GP) containers in stock and are more willing to release these. They're also easier to pick up than their High Cube counterparts. Additionally, consider using 20'GP containers or even 45'HC containers to replace your 40'HCs should they be unavailable.
Another friendly reminder before you go - since ocean carriers are restricting available free time, it's super important to monitor on your inbound shipments to avoid detention and demurrage charges. Keep an eye on your shipments where the Last Free Day (LFD) is approaching and be sure to prioritize unloading those containers and returning the equipment promptly. Use our WorldScope tool to track your LFD and other important shipping information. Contact our team to book a demo here.
We hope your peak season is off to a good start! We're here to help you navigate any challenges you face along the way.
In addition to our import ocean services, we also offer customs brokerage, air freight & air charter, and distribution services including cross-docking and seasonal overflow storage. Give us a call at 440-356-5353 or email firstname.lastname@example.org for a quick quote.
Empty Equipment Status of Ocean Carriers in Asia
Download the latest Transpacific Market Conditions sheet which includes the latest Equipment Availability information as well as Blank Sailings, Reinstated Sailings, Extra Loaders here.