The Imbalance of Containers to be One of Shipping Industry?s Biggest Challenges
The imbalance in container positioning will continue to grow, as world production becomes concentrated in fewer countries. It is expect that more containerized cargos will be moving out of China and other cheap labor countries, and that this imbalance will create a logistical nightmare for shipping companies.
Currently, a third of all containers shipped to Asia from Europe are empty, and it is expected to get much worse. Furthermore, as China becomes the production hot spot in the global economy, it could very likely be that ships will leave full of cargo and return completely empty for repositioning purposes.
What has happened over the years is that the shipping industry has geared itself up to provide expensive high-quality transport services for high value goods, but much of the cargo moved around the world is mostly low-value cargo.
Liner shipping works when it has a solid base of goods that can easily pay for its transport and still be sold profitably at its destination. Because of the nature of liner shipping, which involves a commitment to provide regular service and almost always has a strong and a weak leg in terms of profitability, it makes sense for liners to discount prices to fill the empty space with some type of revenue.
The expectations of strong liner markets could shift and disappear, as production continues to shift to cheap labor markets. Exports and imports have never had a successful balance in the real world, and, unfortunately, it?s expected to get much worse.