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The 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

The 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 ago
This 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 ago
  There 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 ago
  That'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 ago
Shipping 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 ago
  And it's been a real fun couple days in the suez canal...
  - reducesuffering 6y ago
    That ship is still stuck, unbelievable...
speeder 6y ago
I 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 ago
  Food 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 ago
    A food crisis causes the currency to "go down the shitter".
    - tonyedgecombe 6y ago
      More likely the out of control budget deficit.

BurningFrog 6y ago

This 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 ago
There 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 ago
That'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 ago

Shipping 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 ago
And it's been a real fun couple days in the suez canal...
- reducesuffering 6y ago
  That ship is still stuck, unbelievable...

speeder 6y ago

I 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 ago
Food 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 ago
  A food crisis causes the currency to "go down the shitter".
  - tonyedgecombe 6y ago
    More likely the out of control budget deficit.