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February 9, 2021

Container Availability Shows Positive Trends, but the Tide Hasn’t Turned Yet

Container Availability Shows Positive Trends, but the Tide Hasn’t Turned Yet

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Flexport Editorial Team

February 9, 2021

A wave of recent optimistic news reports indicates that the worldwide shipping container shortage—a key driver in pushing ocean freight rates to unforeseen levels—may finally be subsiding. And, while one popular index shows positive trends, Flexport experts take a broad view, noting that container availability is influenced by multiple factors.

An Ongoing Issue

Container problems started during the onset of the Covid pandemic amid labor shortages and uncertain demand. Then, when trade volumes returned in the later half of 2020, containers were in short supply, located in far-flung places.

The problem deepened: Factories reported insufficient bandwidth to produce more equipment—while raising the manufacturing price, in step with fervent demand. US exporters rallied the Federal Maritime Commission as carriers declined hinterland pick-ups to hasten the return to Asia.

Experts hoped for signs of alleviation in early 2021. And, now, relief may be ahead, but the situation still warrants close attention.

Container Index

The Container Availability Index—a predictor of available equipment since late 2019—points to improved container supply, based on millions of container moves. Anything above 0.5 indicates a surplus; anything below indicates shortage.

That index shows positive trends in Shanghai for two popular container types: 0.34 for 20-foot dry containers and 0.37 for 40-foot dry containers, starting at the end of January. Those figures are higher this week.

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Shanghai is considered a bellwether for the industry, but there’s a caveat. Higher container availability in a single port doesn’t mean equal container distribution between carriers—or predictable flow to other ports—just yet.

Another possibility behind the trend is the relatively soft market around Chinese New Year, which may free containers, but for a limited time.

Globally, the scenario is still far from ideal, especially as severe vessel delays in ports remain a threat to container availability. The index trend simply provides a glimmer of hope that aggressive movement by carriers is working.

“Demand will likely remain strong into March and April, so it will probably take another few months before we see equipment issues fully recover,” explains Anders Schulze, Flexport VP and Global Head of Ocean Freight. “There is more complexity than the index indicates. Nevertheless, we should now expect improvements, week by week, lane by lane.”

For now, the Container Availability Index is expected to hold steady or rise through Chinese New Year, but shippers should keep a close eye on the situation and consider the total market landscape.

Follow the ups and downs of the ocean market by reading the Freight Market Update on Flexport’s site or subscribe to the weekly email.

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This is Flexport's mark (alternative). It's the Flexport mark with white.
Flexport Editorial Team

February 9, 2021

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