Hello, it’s IINO.
I would like to broadcast IINO san’s Logistics Radio.
Today, I would like to talk about the theme, “high demand for empty containers from North America”.
Daily Logistics Radio by IINO san in 13th Dec. 2021
Get Empty Containers Back to China
Due to logistical disruptions in Corona, it has been difficult to get containers back to China after transporting products to the U.S.
According to one shipping company representative, they want to bring empty containers back to China on a priority basis anyway.
Generally, cargo is loaded on both sides, on the way to and from China, in order to increase transportation efficiency, but this is not the case now.
Statistics from the Port of LA show that empty container exports were at 61% before Corona in 2019, 65% for the full year 2020, and 76% for the first 10 months of this year, 2021.
Even though the volume of exports from the U.S. is less than the volume of imports, 76% of the U.S. exports are now empty containers.
Why Empty Containers Are Need to Get Back
Empty containers can be loaded with cargo and used as soon as they arrive at the Chinese port.
On the other hand, a container with cargo requires days to be emptied of its contents.
For example, after clearing import customs, the cargo needs to be delivered to the importer, returned to the port and the container needs to be cleaned. In some cases, repairs need to be made.
Also, the shipper may not always come to pick up the cargo right away, and they may spend whole Free Time.
The reason why they are in such a hurry even though increasing the empty container ratio to 76% is because the route between China and North America is a moneymaker one.
Moneymaker Route, China – North America
Due to the information in the article, the most common vessels on North American routes can load more than 10,000 of 20-foot containers, spot freight rate from Shanghai to Los Angeles is around USD 9,000/20′.
In reality, about half of the cargoes on North American routes are contracted on a yearly basis, so the figures are not accurate.
However, if spot freight rates were applied to all containers, it would mean that this is moneymaker route, earning USD90 million one way.
In addition, the October freight rate from Los Angeles to Shanghai was USD1,710/40′, twice as high as the same month last year.
This skyrocketing is due to the fact that empty containers have been given priority over containers with cargo, and cargo has been concentrated in the limited space.
The shipping companies want to get empty containers back and out of China to North America as soon as possible, which Japan has affective.
The Affective to Japan
Professor Matsuda of Takushoku University said, “Japan import has a high ratio of frozen foods, meat, soybeans and other foodstuffs, which can easily lead to shortages and price increases.”
A director of a major meat company also sighs, “Meat is not reaching Japan.”
Furthermore, according to a representative of one of the shipping companies, “There is an opinion that it is a waste of time and money to pull the ship into Japan.”
As a result, there are cases where ships skip the port of call in Japan and head to the next port.
In Thailand, some shipping companies have even stopped providing services to Japan.
The article concludes by saying that the move to prioritize moneymaker routes, which got more remarkable by the Corona disaster, is likely to have a gradual impact on daily life in Japan.
I myself feel that it is getting harder and harder to get space from Thailand to Japan and extent containers and space are becoming a priority to China.
I think it has more to do with the North American economy, congestion at ports and inland, chassis shortage, driver shortage, worker shortage and vaccination than the impact of the Omicron variant of Corona.
I will continue to update relevant information regarding these.