Global container traffic turns to mush: shortages and higher prices are looming

Covid-19, trade conflicts and Brexit. This unholy trinity has turned global shipping container trade upside down. That chaos is on its way to our store shelves, resulting in shortages and increased prices.

Fitness equipment and bicycles

A glance at the general rates for shipping containers immediately shows the scale of the problem. Compared to a year ago, the average price for a container has almost quadrupled. But this general trend hides large individual fluctuations that make it almost impossible for small players to function normally.

Belgian newspaper De Standaard made a report in which several managers of import companies and wholesalers testify about the impact of this market trend on their activities. A transporter saw the price of a shipping container rise from 1,200 dollars last year to up to more than 10,000 dollars today. A company supplying fitness equipment and bicycles is confronted with immense delays. The waiting time for treadmills, for example, rocketed from a maximum of 48 hours to four to six months.

Because parts of the world are in lock-down, the demand for sports and fitness equipment has also increased enormously. But pressure coming from the demand-side can’t fully explain the disruptions in the supply chain.

Covid-19, Brexit and Trump

There is, of course, the impact of the coronavirus crisis. Global trade flows slowed down as a result, and shipping companies reduced their capacity. Many companies also built up stocks in anticipation of Brexit and the impact of Donald Trump’s trade disputes caused by import tariffs. As a result, a lot of shipping containers are blocked.

Around this time, every year there is an increase in container tariffs in the run-up to Chinese New Year anyway. Companies anticipate the slowdown of Chinese production. But that effect is now greatly amplified by these other, exceptional factors.

A surplus of 30 euros for a flat-screen TV

And customers will notice this in the stores. Shortages of products that typically depend on seasonal supply, like garden furniture, are looming. These are products that are usually imported with entire shipping containers at once. And goods that do get through, are likely to become significantly more expensive. De Standaard makes a rough estimation for television sets.

A standard shipping container can contain about 300 flat screens. If the price of that container rises by 6,000 dollars, and if that increase gets passed on in full to the customer, then, after the store’s margin (and VAT), the customer will pay about thirty euros more for the same television set.