Container shortage is shipping’s Achilles’ heel and greed for more is humanity’s even when there is much more than enough

The shortage is raising eyebrows because, until recently, ocean liners had far too many boxes compared with prevailing demand. This was after shipping companies and lessors spent heavily on new equipment during the pandemic to ease congestion.

 But in what is beginning to feel like this industry’s Groundhog Day, liners are again scrambling to find containers — this time due to vessels rerouting following Houthis’ attacks in Red Sea.

Geopolitics is inherently unpredictable, but an industry trusted with carrying around 90% of the world’s goods, and which earned hundreds of billions of dollars during the pandemic, still lacks sufficient resilience.

An initial surge in freight prices — prompted by ships taking the much longer route around the Cape of Good Hope — petered out in March, yet prices have now surged even higher. Amid signs of intensifying port congestion in Asia and the Middle East, AP Moller-Maersk A/S this week raised its full-year earnings forecast for the second time in a month.

These shortages could “become even more pronounced in the weeks and months to come, as empty boxes are not available where they should be,” Constantin Baack, chief executive officer of Norwegian firm MPC Container Ships ASA, predicted last week.

Maintaining the flow of empty shipping containers is always a challenge because global trade is lopsided: China is a big net exporter of merchandise, whereas the US is a net importer, for example...
 On average, roughly one-third of containers are transported empty so they can be repositioned.

An xChange spokesperson described the situation as “a bit of a price bubble” with some market participants “holding onto their inventory, waiting for prices to rise even further.”

Around half of the world’s shipping containers are directly owned by the shipping lines, while the remainder are mostly owned by lessors.