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Where are all the containers? The global shortage explained
- luthfur 6y agoGot curious about the reasoning behind the global container shortage. This post has some explanation.
- toomuchtodo 6y agoExcellent post, thanks for sharing.
- dmurray 6y agoThe mechanism described in the article is that Asian economies are business as usual, but European and American activity has slowed because of the pandemic, so there's lots of demand to ship from Asia, but nothing coming back. This makes sense, but at a macro level it can't have too large an effect on shipping rates: at worst, you need to pay for a round trip to bring back the empty container, instead of a one way journey. A 100% increase, which is a lot in most contexts, but oil prices (the other main marginal cost in shipping) fluctuate by that much three years out of ten. Container shipping is so cheap these days that I don't see this effect killing the margins of many businesses.
- BurningFrog 6y agoThis argument assumes away the container shortage. With a shortage, prices rise until supply meets demand. There is no "100% increase limit" on that effect.
- thayne 6y ago> at worst, you need to pay for a round trip to bring back the empty container That assumes the container is ready for you to bring back. It sounds like a big part of the problem is that North America is a bottleneck where it is taking containers in, but they aren't available to be sent back, empty or not.
- angry_octet 6y agoThere was a huge backlog at the Port of Los Angeles in 2020 due to COVID labour constraints, ships were waiting weeks to dock and containers were piling up at the railhead. Now they have workforce constraints and a trade imbalance. Perhaps the freight industry has long term contract rates which assume bidirectional flow, and they can't operate economically without essentially doubling rates, so they constrain capacity. https://www.maritime-executive.com/article/los-angeles-addresses-backlog-and-diverts-ships-as-volumes-rise https://www.maritime-executive.com/article/los-angeles-addre...
- URSpider94 6y agoThat's what I took away. It seems like there were a lot of containers on ships that came into US and European ports in Q2 last year, when the economy was shutting down, and those containers haven't been turned around as empties yet.
- Spooky23 6y agoShipping is totally fubar right now. West coast ports like Long Beach were jammed up as ships carrying PPE were prioritized and longshoreman were sidelined by quarantine and infection. Part of my business is a logistics operation... post-Christmas we were hobbled, I lost 30-40% of manhours any given week and the customers on the other side were the same way. I had to cut throughput 50-60% and overcommit staff to do what I needed to do. Inventory on hand is 10x what it should be. So I would guess that a lot of the container issue is inventory stuck in the channel. Even companies like Walmart are struggling to keep shelves stocked, and they have a world class, vertically integrated operation.
- sdenton4 6y agoAnd it's been a real fun couple days in the suez canal...
- reducesuffering 6y agoThat ship is still stuck, unbelievable...
- speeder 6y agoI am from Brazil and I can say... things are screwed hard. 1. Food prices are rising fast, I am literally spending double per month now of what I spent 8 months ago. 2. The shipping shortage led to a severe deficit of materials, my shop sell stuff to auto manufacturers, and one of them told me they will have to shut down the whole factory because they can't get their hands on a passenger seat shipment, and already have their yard full of incomplete cars. 3. The deficit even affected politics: we had elections recently, I talked to one mayor candidate in person, and the candidate complained they couldn't make certain forms of campaigning, for example handing out flags, because the flag manufacturer was struggling to get a shipment of plastic to make the flag handles! 4. Some cities there been utter chaos as trucks with produce pile up waiting for containers, this week in particular people almost came to blows because trucks started to fill up a city, and the mayor banned crowds from the farmer market because COVID, leading to farmers to start to unload produce in the middle of the street and grind the whole city economy to a halt. 5. My shop been trying to stock products because we can't rely on imports, this has been extremely crazy, we get shipments at random dates, demand spikes on random dates too, we ran out of physical space, manufacturers been raising prices to us out of the blue (sometimes two months in a row)´, and another manufacturer seemly just gave up, whenever we call them, they say there is no trucks available so they won't bother even trying to manufacture whatever we ordered.
- tonyedgecombe 6y agoFood prices are rising fast I don't think that's just the container crisis, your currency has been going down the shitter for some time now.
- imtringued 6y agoA food crisis causes the currency to "go down the shitter".
- tonyedgecombe 6y agoMore likely the out of control budget deficit.
- BurningFrog 6y agoHave container manufacturer stocks gone up?
- angry_octet 6y agoMost containers are made in China, so who knows, their economy is extremely distorted. Mills were producing steel well below cost for a long time, but ore prices have gone up and some inefficient mills are being shut down, so supply side costs increasing. Mills also reduced capacity significantly in 2020, causing a production bubble. https://www.fitchratings.com/research/corporate-finance/global-steel-price-rally-will-be-short-lived-02-02-2021 https://www.fitchratings.com/research/corporate-finance/glob...
- Sabinus 6y ago>Mills were producing steel well below cost for a long time How is this possible? Government subsidies?
- pestatije 6y agoIt's cheaper than stopping production.
- namibj 6y agoNotably, steel blast furnaces go offline once every 10~20 years, and that's to replace the firebrick lining on the inside. They take months to ramp up, and at least weeks with no output.
- angry_octet 6y agoYes, it's the remnants of the command economy and production targets, but generally structured as state owned companies. As others have pointed out, you don't easily stop and start foundries.
- rswail 6y agoThere's also a political trade dispute with Australia for metallurgical coal leaving ships stranded waiting to unload. In the meantime, iron ore prices are spiking.
- sokoloff 6y agoTEU is “twenty-foot equivalent unit”, a measure of cargo volume. (I had to look it up.)
- oblio 6y agoIt absolutely sucks that we got these silly non-metrics units in widespread use. TEUs (it should be cubic metres), inches (for screens we should use sqcm + aspect ratio), etc.
- Jun8 6y agoClassic network balancing problem. Even in regular times this causes gross inefficiencies: A number of years ago I had heard that for large carriers (e.g. FedEx, UPS) ~20% of trailers you see on the road drive totally empty to balance their network. They didn't have a good solution to optimize this figure nor did they know what the minimum value of this percentage could be.
- throwaway894345 6y ago> A number of years ago I had heard that for large carriers (e.g. FedEx, UPS) ~20 of trailers you see on the road drive totally empty to balance their network. This is a typo right? It should be 20%?
- Jun8 6y agoYep, thanks for catching that, edited to correct it.
- BurningFrog 6y ago20% sounds like a lot, but I don't know what to compare it to. Surely no system could reach 0%. Some areas are bound to be net exporters of stuff, and others net importers.
- ethbr0 6y agoWell, perfect inefficiency would be 50%, right? Assuming standard routes / no repositioning. I.e. towing an empty back for every container you shipped full. I have no idea what percent is needed to cover repositioning, but 20% sounds decent. Especially for a dynamic demand system (little ability to micro forecast flows).
- refurb 6y ago20% sounds pretty good? I mean you’d expect empty trailers for delivery - the flow of goods to be predominantly one-way (e.g. Memphis sends way more volume to Chattanooga than the other way around).
- 6y ago
- throw0101a 6y agoAlso issues which pallets: * https://theloadstar.com/where-have-all-the-pallets-gone-on-shelves-in-warehouses-every-one/ https://theloadstar.com/where-have-all-the-pallets-gone-on-s...
- caf 6y agoI'd idly wondered in the past whether containers had the capability to be dismantled for more efficient shipping when empty - I guess not?
- psychiatrist24 6y agoI thought they could be folded flat? Maybe that was just some special models I have seen, though.
- mcculley 6y agoThe vast majority definitely cannot be folded or otherwise disassembled. They are welded together as simply and with the fewest number of parts as possible, while complying with international standards.
- laurent92 6y agoI doubt it, they need to withstand rain, snow and seawater, possibly refrigeration for a good share (I’m thinking about Apple products which are not supposed to go beyond 35°C - How do we manage sun exposure between the tropics?).
- Erlich_Bachman 6y agoSurely it's "35C" only when powered on? Which is still a weird figure which is probably wrong because how are those products going to work close to a human body which has a default temperature of 36C (when not excercising, when not in the sun, etc.etc.)?
- OscarCunningham 6y agoYour core temperature is that hot, but your skin won't be (unless you're in a desert or something). So you'd never be able to transfer that temperature to a Mac.
- 6y ago
- m463 6y agofrom january: https://www.freightwaves.com/news/inside-californias-colossal-container-ship-traffic-jam/ https://www.freightwaves.com/news/inside-californias-colossa...
- ClumsyPilot 6y agoGlobalisation and cost cutting gave us this fragile system with no redundancies, no stockpiles and backups. When something esssential runs out, we are just stuffed. Whats worse is diffusion of responsibility - someone could be on the critical path to essential suppliers for millions of people, but at the same time have no obligations to ensure their job is done, and perhaps not enough profit margin to plan for the shit time. All it took was a sneeze and the whole thing falls apart.
- psychiatrist24 6y agoThings have not really fallen apart, though. You can even still get coffee. I find it silly to claim this or that should have been stockpiled with hindsight. There are just too many different things to stockpile. And the same people demanding that are probably the ones taking to the street protesting against wasteful living.
- bob33212 6y agoYes, these people complaining should at a minimum point us to a post where they suggested that we stockpile coffee or shipping containers years ago.
- nitrogen 6y agoThey don't post about it, they just do it. They are the people whose pantries were never empty.
- carbotaniuman 6y agoAnd yet we as a society look down on preppers. It's quite sad to see people complain about shortages and do nothing themselves. These aren't even shortages due to economic reasons or poverty, but rather due to simply to disruptions.
- A4ET8a8uTh0 6y ago
- jrochkind1 6y agoBut... don't the ships have to get back to China somehow, if they are going to bring more cargo from China to north america? Why don't they take containers (even empty) when they do so, especially when they are so valuable. If the ships aren't piling up in north america, how are the containers? Are ships leaving north america without picking up containers and if so why?
- jfoutz 6y agoThe container gets trucked nationality
- AnimalMuppet 6y agoAnd then has to be unloaded, and sent back. Worse, if it's being sent back loaded, it has to make two stops in North America. Ships are too valuable to wait around for the containers to catch up.
- mannykannot 6y agoThat would mean idling your ships, and not in the expectation of picking up a lucrative cargo, either - and there is no guarantee that you will be the direct beneficiary of your benificent action. It's a variation of the 'tragedy of the commons', where the individual incentives are not aligned with the optimal outcome. In fact, it is very like the incentives to send out your fishing fleet to scoop up another catch before all the fish are gone.
- ls612 6y agoThis isn't really a tragedy of the commons, the price of shipping containers will rise until it is profitable to return the containers to Asia. This is a classic example of markets working to allocate resources via pricing signals. The only quirk is that when there is a month-long ocean voyage involved there is some lag time before things change.
- oasisbob 6y ago
- newhotelowner 6y agoNow I know why I can't get towels for my hotel. None of the hotels can't get towels. My franchise changed supplier because there is a towel shortage since last December.
- RotANobot 6y agoI’m curious. How often do hotel towels get replenished? What’s the average lifespan?
- twothamendment 6y agoThey get replenished as often as they are stolen. How long they last we'll never know!
- toast0 6y agoMy MIL has hotel towels she stole decades ago. They last a pretty long time.
- deleted 6y ago[deleted]
- euroderf 6y agoLet us recall the good ol' days, when hotel towels were tastefully branded and of course got swiped (marketing marketing marketing!). The modern counterpart is a passive-aggressive notice on the wall that says that if you care to swipe a towel they will gleefully add it to your credit card bill. No fun, no cheer, no margin, no marketing.
- tonyedgecombe 6y agoVirgin used to print a message on the bottom of their tableware that said "Pinched from Virgin Atlantic". https://colinseymour.co.uk/pinched-from-virgin-atlantic https://colinseymour.co.uk/pinched-from-virgin-atlantic
- luthfur 6y agoAlso, this doesn't help things: "Suez Canal Blocked After Giant Container Ship Gets Stuck" https://www.nytimes.com/2021/03/24/world/middleeast/suez-canal-blocked-ship.html https://www.nytimes.com/2021/03/24/world/middleeast/suez-can... 100 ships stuck behind it. When it rains, it shit pours...
- Izkata 6y agoSee also https://news.ycombinator.com/item?id=26560319 https://news.ycombinator.com/item?id=26560319 where this was posted earlier today. Someone there posted https://www.vesselfinder.com/?imo=9811000 https://www.vesselfinder.com/?imo=9811000 for real-time status, which seems to show the ship is still stuck.
- frabjoused 6y agoOr, when something hits the media curve, people become more aware of other things like it (which were happening all along).
- luthfur 6y agoAh yes, entirely true. I wouldn't have come across this news if I didn't go down this container rabbit-hole.
- refurb 6y agoNot only that, but when news is slow things get reported on that happen all the time but never get talked about normally.
- caf 6y agoI don't think that's the case here, though - it has been reported that this may well be the first time it has happened in the canal's 150 year history.
- alexchamberlain 6y agoIn what way? I think ships get stuck for a day or so every couple of years. Maybe the first time it’s been this long?
- luthfur 6y agoBtw those who click through the link thinking this is about Docker containers..... well...sorry hehe ¯\_(ツ)_/¯
- ludamad 6y agoI'm concerned about the docker container shortage
- infernalsaint 6y agoProbably a big deal, maybe some of them are getting lost in memleaks and unexpected fault crashes
- mjevans 6y agoI was thinking of containers that could be split up and shipped in parts then re-assembled... However that doesn't fix the problem of ships being out of balance too. Cheaper energy and AI to assist with shipping (and maybe operating sealed power plants authorized by major nuclear world powers).
- yourapostasy 6y ago> *containers that could be split up and shipped in parts then re-assembled...* There are flat-pack containers, but they don't have the robustness or water-tightness of conventionally-built containers. People abuse container working limits something awful to squeeze pennies, so the flat-pack version will end up net costing more. If the US Navy designed a nuclear-powered container ship class for rapid ultra-heavy-lift capacity, like enough to haul over an entire light (400,000) army group in one pass, then that's probably around 200, maybe 300 ships? The fastest sealift in US Navy inventory is 33 kts, so a nuclear-powered one with no fuel concerns could probably put on another 30% to that easily, so around 40 kts; much faster and they'll start outrunning most naval escorts. Not every warfighting artifact fits in a container of course, but the military has the luxury to be able to define their own extensions to the ISO standard (and they have, with the bicon/tricon/etc. standards). There are about 5,300 container ships in the world, so at the high end this would be about 5% of world capacity. Maersk operates a fleet of around 700, so it isn't too outrageous, if the US wants massive force projection. Such a fleet could step in to preserve national-security-critical supply chains. Coffee IMHO, is not national-security-critical, heretical as that may be. For the record, I'm against the US projecting force around the world. It's not worth it IMHO, but like most people on the outside of the US looking in, I'm outvoted. On a strictly we-must-be-the-hyperpower-at-any-cost basis however, it makes sense for such a posture to invest heavily into that kind of ultra-fast, ultra-heavy-lift logistics capacity at that kind of scale. I'm just glad that the kind of leadership glamour disease that has befallen so many US corporations has seeped into its military, and they'll never believe in the benefits of unglamorous logistics and infrastructure until it is too late to fund.
- matz1 6y agoThis global shortage is caused by lockdown. Its clear that lockdown created massive problem. Way more than the virus itself. We need to make sure that lockdowns don't happen again in the future.
- detcader 6y ago> This global shortage is caused by lockdown. That's a worrying prospect. Do you have a source linking the two?
- Clewza313 6y agoNot so much lockdown, as mobility issues. For example, many labor-dependent industries like fruit picking and construction normally depend on migrants or seasonal labor from overseas, and are having a very hard time coping without it.
- matz1 6y agoIts in the article itself. "As the pandemic spread out from its Asian epicentre, countries implemented lockdowns, halting economic movements and production. Many factories closed temporarily, causing large numbers of containers to be stopped at ports"
- throwaway53453 6y agoI agree. Social distancing + vaccination is pretty much the only effective strategy so far. Lockdowns do enforce that, but they also create vast damage beyond what's needed.
- rswail 6y agoLockdowns are the only solution for stopping the spread of an infectious virus or bacteria. How you implement the lockdown and how long for depends on the infection rates and treatment requirements. If everyone masked/maintained hygiene/social distanced, then lockdowns can be lessened, but the best way to stop infections is to stop providing the environment were infections can occur. Unless there are both effective and scalable treatment options, then some form of isolation is the only alternative.
- enw 6y agoTangentially related, but if you're curious, here's a photo of HMM Algeciras, the largest container ship in the world: https://www.easycargo3d.com/wp-content/uploads/2020/08/hmm-algeciras-1-1536x835.png https://www.easycargo3d.com/wp-content/uploads/2020/08/hmm-a... It's able to carry 24,000 of those large ISO containers.
- Qub3d 6y agoNitpick: 24,000 TEUs, or 20-foot equivalent units. Most containers are 40ft or bigger, so its more like 12-15,000. Still a lot, though!
- creato 6y agoJust counting the containers in the picture, it looks like there are 24 x 20 x 9 = 4320 containers. I guess below deck there could be another ~4000, but that still leaves another 4000? Can they stack them that much higher?
- Draken93 6y agoLooking at the picture I would say that the ship is narrower in the front then it is in the other 23 rows. If I am counting correctly, you can see about 209 +2423*9 = 5148 containers. Still, I am unable to see how 12000 containers would fit the ship. Edit: I am correct, as you can see in this picture: https://en.wikipedia.org/wiki/Algeciras-class_container_ship#/media/File:HMM_ALGECIRAS.jpg https://en.wikipedia.org/wiki/Algeciras-class_container_ship...
- samstave 6y agoThese ships are way deeper than they look. As I understand it, they hold way more below deck than above deck.
- maxekman 6y agoRelated: https://news.ycombinator.com/item?id=26571129 https://news.ycombinator.com/item?id=26571129
- synaesthesisx 6y agoIf only there was a means of performing container orchestration effectively IRL
- ced 6y agoAnticipating major industry collapse, the Carrier Alliances showed remarkable discipline in aligning supply with demand as early as February; removing trade capacity from the seas by halting vessels and shipments. By doing so, the erosion of ocean rates was kept to a minimum. Basing their reaction on potential worst case scenarios, shipping carriers artificially created under-capacity. This made available space come at a premium and therefore significantly raised the cost of container shipping, stabilizing revenues for carriers. If I'm reading this right, container shipping is an oligopoly similar to OPEC and they all banded together to reduce supply enough to raise prices, while in a competitive environment prices would have gone down due to reduced demand?
- deleted 6y ago[deleted]
- Boltgolt 6y agoThis "Carrier Alliance" does sound an awful lot like a Carrier Cartel
- acrooks 6y agoIt's not quite how it sounds. There are a number of Carrier Alliances worldwide - "2M", "THE Alliance" and "Ocean Alliance". And there are a number of container carriers that operate independently without an alliance. Since around 2008 it has been very difficult for ocean carriers of all types (not just containers) to turn a profit and so they all embarked on different strategies to try to become more efficient and manage costs. Before the Alliances, large ocean carriers needed to have an active and full network worldwide to attract customers. It's kind of like the transit problem: you don't get customers until you have a large network, but you can't afford a large network until you have a lot of customers. So many carriers operated routes that were loss leaders hoping to profit significantly off their mainline trades (you see the same in air travel). The Alliances were one strategy to try to help these businesses become more efficient while still offering customers door-to-door shipping services, so in THE Alliance, there are a number of carriers each with different primary focuses, which means that they can operate much more efficient routes and take cargo wherever it needs to go. The price of shipping a container is highly commoditized, there's intense competition in the market, and the margins are razor-thin, so I'm fairly confident that price-fixing isn't a significant factor in this industry. As well, as a shipper, the lions share of your costs getting a container from A to B are not the ocean transportation but everything else. Container storage at the port. Transport to the port. Loading and discharging costs. A multitude of fees that easily double or triple the raw container shipment number. Carriers have invested a lot in this space over the past years to verticalise and able to offer more of these services to their customers, instead of just being a pure ocean carrier. That (freight forwarding) is where the real margins are, and customers appreciate it because they get one simple upfront price, vendor management is easy, etc.
- andi999 6y agoDocker used them all up...
- tobyhinloopen 6y agoDidn’t you see? They were stuck on a boat on some canal!
- rini17 6y agoI think will be solved similarly as telecommunications, using space. I mean, suborbital container launches.
- ReadFList 6y agoAnother fantastic consequence of dismantling industries everywhere and move everything to China.
- andy_ppp 6y agoJust some anecdata from my partner’s business - before all this shipping a container of woks from China to the UK cost £1500 and last month it cost an astonishing £9000.
- OliverJones 6y agoPrediction: By mid-2022 there'll be a glut of containers. All the publicity around the present shortage will induce manufacturers to ramp up capacity. But that takes time. The short-term pinch will evaporate by the time production ramps. I wonder if there's a good systemwide way to handle this problem. Airlines use "irrops" -- irregular operations -- teams to handle big weather events, to get their airplanes to where their passengers are waiting. I suppose ocean shipping has similar irrops protocols. But the grounding of the Ever Given in the southern Suez Canal indicates that shipping irrops teams ignore actual weather events at their peril. See Peter Senge's The Fifth Discipline.
- alsetmusic 6y ago> Prediction: By mid-2022 there'll be a glut of containers. All the publicity around the present shortage will induce manufacturers to ramp up capacity. From someone else quoting TFA: >> Anticipating major industry collapse, the Carrier Alliances showed remarkable discipline in aligning supply with demand as early as February; removing trade capacity from the seas by halting vessels and shipments. By doing so, the erosion of ocean rates was kept to a minimum. Basing their reaction on potential worst case scenarios, shipping carriers artificially created under-capacity. This made available space come at a premium and therefore significantly raised the cost of container shipping, stabilizing revenues for carriers. It seems the constraint is artificial. edit: moved >
- tarsinge 6y agoAnother great opportunity to question the global supply chain that is not sustainable anyway. I understand it disrupts critical industries, but the impact on consumer over consumption of crap is a blessing.
- hourislate 6y ago>North America currently faces a 40% imbalance; which means that for every 100 containers that arrive only 40 are exported. 60 out of every 100 containers continue to accumulate, which is a staggering figure considering the China to USA trade route sustains on average 900,000 TEUs per month. >The scrapping of containers now exceeds the building of new ones, causing inventories in factories to plummet. It will take months before more vessels and containers are built, meaning capacity likely won’t normalize until Q2 2021. Interesting, try to buy one and they are charging and arm and leg. About 10-15 years ago you could pick up an old 40 FT container for about $500. Today you could go to a yard that has 10000 stacked and rusting containers and they want $2k plus to buy a beat up one. Here is a 20 Ft beat to shit for $3600 https://northerncontainersales.ca/shipping-container-prices/toronto-on/ https://northerncontainersales.ca/shipping-container-prices/...
- oblongx 6y agoI'm currently trying to buy one, best quote I got was 3k U.S. for a 20ft but that did include $900 for shipping.
- tomaaron 6y agoI hide them in my Kubernetes Cluster. :D
- stormqloud 6y agoFunny how nobody mentions 15 large container ships like this generate as much emissions as all the cars in the world combined. It's almost like buying products from slaves in Asia and transporting them across the ocean is bad for the planet and the citizens of the planet.
- rmah 6y agoDo people not understand how insulting it is to call people in poorer nations who work hard to build a better lives for themselves and their families by making the crap you buy "slaves" is? Am I the only one who gets annoyed by this?
- Cloudef 6y agoAmericans cant think very far
- stormqloud 6y agoThe only people that benefit from the current system are the executive for fortune 500 companies. They buy junk to sell us made by slaves, they capture 99% of the profit in the importation step and then they avoid paying any taxes with legal.paperwork scams through Ireland, channel islands etc.
- BBC-vs-neolibs 6y agoExcept maybe to the actual slaves? Uyghurs aren't exactly volunteering to work in those factories.
- stormqloud 6y agoWalmart, amazon etc They all have local contractors to handle the messy work of beatings, imprisonment. "work will set you free". Bonus points for where that comes from.
- stormqloud 6y agoIf China rebrands the Uyghurs as alt right conservatives, the world would suddenly be on the China side.