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TIME TO THINK OUTSIDE THE BOX ˆ BY BASIL KARATZAS The pandemic has played havoc with containerised shipping, with shippers used to exporting on cheap, ‘back-leg’ lines facing unprecedented – and expensive – circumstances
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upply chain disruption is the buzzword de jour as container ships have to wait for weeks before being able to dock and unload the boxes onboard. While most of the concern is focused on empty grocery shelves or delayed deliveries of non-perishables, one aspect of the containerised shipping has taken the back stage: unlike the “front leg” disruptions (delivering containers from China to North America and Europe) that are the visible part of the trade, there is also the less visible “back leg” – when empty containers accumulate in North America with no cargo to ship – which also has been impacted by the current state of the container line trade. There have been imbalances of trade – and then there is that between China and the US (an estimated $340bn in 2021) and, accordingly, a permanent excess of containers in the US that have to be shipped back to China and Asia for re-loading. In normal times, container liner companies were more or less obligated to take empty containers back to China to be re-loaded and this back leg was a complete deadweight as the containers were empty and container liner companies did not have any pricing power. By some estimates, even in normal times, shipping empty containers from the US West Coast to China accounts for approximately 45% of the trade – that is one in every two containers gets shipped empty, not only forfeiting revenue, but actually costing money for the liner company. In general, empty containers from the West Coast of the US to China were shipped for a few hundred
BULK TERMINALS
international | WINTER 2021-22
