It seems the global supply chain can’t catch a break, as a shipping container shortage is just the latest disruption in a string of unfortunate events related to the shipping industry. Of course, when shipping containers are unavailable, it can lead to a whole slew of other issues within the supply chain. 

Below, we’ll address the factors causing the shipping container crisis and some of its potential impacts on the shipping industry. 

Diversions


The Red Sea crisis is a major factor contributing to the container shortage. The Houthi militias that have been attacking and hijacking vessels since last October continue to be a threat. They’ve caused shipping companies to reroute away from the Suez Canal and divert their cargo to the much longer passage around Cape of Good Hope. 

This diversion means longer sailing times, during which those containers are stuck in a holding pattern until they reach the next port. Once those rerouted vessels finally reach another port, they face port congestion that further delays the unloading and emptying of those containers and pushes back delivery times.

 

Increase in Demand

Unexpected demand is another element influencing container availability. Recent data revealed a 9% increase in demand for sea transport in the first quarter of 2024 compared to the same time the previous year. That, paired with the fact that we’re seeing an early start to the usual peak shipping season, is putting additional strain on the supply chain. 

Shippers typically begin ordering back-to-school supplies and holiday items in June, but due to the container shortage, many have begun placing orders even earlier to prevent it from impacting their inventory. This is basically adding insult to injury, as this spike in demand puts even more stress on carriers to find containers that are already scarce. 

 

More Instances of Blank Sailing


Due to the rerouting and demand influx, many carriers have had to turn to blank sailing, which is when they cancel a scheduled port of call on their route. 

This means some containers aren’t ending up at ports where they were expected, while others are piling up at ports that are already backed up. In other cases, it could mean empty vessels without cargo are embarking on long journeys back to Asia to replenish and reposition their containers, which is not only inefficient but also creates imbalances in global trade and further delays. 

 

Bad Weather

Furthermore, inclement weather has contributed to the container shortage. At the end of April, bad weather impacted ports in China, Singapore, and Malaysia, causing some carriers to skip ports of calls in the region or alter their routes to make up for lost time. 

Because of this, many carriers haven’t been able to return their containers to ports in East Asia, compounding the shortage. 

 

Impacts of the Container Shortage

The global supply chain is extremely fragile, as just one disruption can cause a ripple effect. Regarding the container shortage, we’re already seeing the price of containers surge while shipping delays are already in full effect. If the shortage continues, we could even see it impact inflation rates. 

This container shortage is just one example of how outside influences can impact shipping companies. To find out more about cargo insurance options and risk management strategies, contact Falvey Insurance Group today.