Battleships can’t turn on a dime, and neither, apparently, can the global traffic of container ships.
And that’s bad news for the auto industry. According to the consulting firm AlixPartners, a perfect storm of market problems last year got the world’s supply of shipping containers out of whack, and as a result, overseas shipping prices have been rising.
The spot price for shipping a 40-foot container from Shanghai to Long Beach, Calif., has reached a 10-year high, exceeding $4,000, AlixPartners reported last week — up from a normal rate of $1,600.
The problem: The arrival of the pandemic in spring halted overseas supply line movement for many manufacturers, and that was followed by an abnormal surge in fear-driven consumer demand for household goods, which was followed in turn by surging factory orders to make up for lost 2020 production time, which was followed by a late-2020 second wave of the pandemic.
As a result, empty cargo containers are stacked up in parking lots, depots, port facilities and elsewhere around the world, rather than where they are needed — shipping operations where manufacturers need to load them up.
“This has happened a couple of times in the past 10 years, and it will eventually get straightened out,” said Marc Iampieri, AlixPartners managing director.
But he warned that the traffic mess and the resulting high shipping prices will probably last until summer 2021, inflating production costs for plants that rely on imported materials.
He declined to venture an estimate of how many containers are currently in use or how many are sidetracked. A single oceangoing cargo ship carries 13,000 to 14,000 containers.
“There is no shortage of containers,” Iampieri emphasized. “There are enough of them — they’re just all in the wrong place right now.”