Global Shipping in distress as major ports pile up with empty containers

In the week of Feb 5, the container monitoring platform Container xChange reported that CAx (Container Availability Index) rose to 0.64, indicating that more containers entered a port than left it. This is the 11th consecutive week the index was above 0.6 CAx. This piling up of empty containers at major ports around the world is a reflection of slowing economies weighing on shipping demand.

A dock operator at Shanghai while speaking to Caixin citing a rare sight said that the docks in Shanghai port are filled with empty containers and many must be moved to nearby Taicang port.

A satellite view of the Taicang Port, China

Shanghai, which is the world’s biggest container port, during COVID-related lockdowns early last year witnessed containers pile up on the docks causing months of backlog.

Indicating a similar situation in the recent months, the export hubs including Shanghai and Qingdao, cited a CAx readings for 40-foot containers between the range of 0.6 to 0.7, while the indexes at the major import hubs of Antwerp in Belgium and Los Angeles in North America have been above 0.8, said Xu Kai, Chief Information Officer of the Shanghai International Shipping Institute.

Shanghai Port on Jan 8,2023.

Leading to widespread pressure on empty container stockpiles at China’s major ports since the fourth quarter of 2022, is the higher return flow of empty containers than the export volume of filled containers, a large freight forwarder told Caixin.

Idle containers globally account for about 6% of total capacity, and some idle ships are also filled with empty containers, the freight forwarder said.

A.P. Moller-Maersk A/S, which handles about one-sixth of the world’s containers, said last week that 2023 demand in the container shipping industry is set to fall as much as 2.5% but may rise 0.5%.

The container giant said the company turned some idle medium-size container vessels into floating empty container platforms, which can be used to store empty containers to reduce costs and facilitate the transfer of empty containers between ports.

Further contributing to the pile up of empty containers at the port is an oversupply of containers. In 2021, ocean carriers ordered a record number of containers while retiring fewer aging units. The global stock of shipping containers increased by 13% to almost 50 million twenty-foot equivalent units (TEUs) in 2021. According to maritime research consultancy Drewry, that was three times the previous growth trend.

It estimated that as many as 6 million TEUs of surplus containers now exist in the global equipment pool. Shipping consultancy Clarkson projected that container shipping volume will total 201 million TEUs in 2023, down 3.1% from last year.

The slowdown in shipping demand has also resulted in the decline in freight prices. Since the second half of 2022, the Shanghai Export Container Freight Index, which reflects spot market rates, fell by about 80%. On Friday, the spot shipping rate for a 20-foot container from Shanghai to Europe fell to $925, down 88% from the 2022 high, while the rate for a 40-foot container from Shanghai to the U.S. West Coast fell to $1,293, down 84% from the 2022 high, data from Shanghai Shipping Exchange showed.

Generally, the container shipping market gradually rebounds 45 days after Lunar New Year, which fell in late January this year, a senior freight forwarder told Caixin. But this year the recovery may take at least 60 days, he said.

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