Shipping Costs Surge due to Container Shortage

By Hidetaka Yamamura Yomiuri Shimbun correspondent and Masaki Sugiyama Yomiuri Shimbun Staff Writer

16:26 JST, January 25, 2021

The global supply chain is being gummed up by a shortage of shipping containers, especially in Asia, and transportation costs are soaring. The shortage is also causing delays in Japanese imports and exports.

The situation is attributed to increased demand from people in North America who are spending more time at home amid the novel coronavirus crisis; Containerships from China loaded with daily necessities bound for the U.S. are simply not being unloaded fast enough due to outbreak-related restrictions and quarantine requirements.

■ Influence

Honda Motor Co. announced in December that some motorcycles it makes in Thailand and Vietnam were temporarily delayed for delivery to Japan. Currently, most of the problems have been resolved, but a lack of containers and other factors have made marine transportation more unstable.

At the end of last year, deliveries of auto parts were temporarily delayed at a Japanese automaker’s plant in Asia. Production could have been suspended, it said. Delays are also being seen in transporting furniture and construction machinery imported from China and Southeast Asia.

According to the Japan External Trade Organization, trade in Asian countries including Indonesia and the Philippines are also experiencing trade disruptions.

Container shortages have led to higher shipping fares. According to The Japan Maritime Center and other sources, the cost of shipping a 40-foot (about 12 meters) container from Shanghai to Los Angeles had increased by about 2.4 times as much as a year ago at the end of 2020. If fare hikes continue, the higher fares could be passed on to product prices or put downward pressure on corporate profits.

■ Background

Behind the shortage of containers is a surge in demand for furniture and other daily necessities, mainly in North America, as many people stay at home due to the novel coronavirus.

As China was the first among major countries to recover from the effects of the coronavirus disaster and its production activities were recovering, cargo bound for North America from China increased.

In addition, the situation is exacerbated by the fact that fewer workers are unloading cargo at major North American ports due to the spread of the infection, and foreign crew members are required to be isolated when entering ports. It is said that the process of unloading the goods in the containers takes time, and there are many container ships anchored off major ports on the U.S. West Coast waiting to unload.

“No containers come back from North America to Asia,” a shipping official said.

About 90% of shipping containers are manufactured in China. The companies that make them have said they are increasing production but cannot keep up with demand.

■Replaced by air transport

Companies and the government are rushing to deal with the situation. According to SG Holdings Co., which owns Sagawa Express Co., shippers are increasingly using air instead of sea transportation.

In December, All Nippon Airways Co. launched its large cargo plane, a Boeing 777, on the Narita-Bangkok route for the first time. The plane carries automobile parts produced in Southeast Asia to North America via Narita.

Ocean Network Express Pte. Ltd., which operates containerships, is asking shippers to collect and return containers ready to be unloaded as soon as possible. They also operate dedicated ships to transport empty containers back from the U.S..