Port of Shanghai Takes Steps to Address Container Short Supply
In response to the ongoing demand for empty containers and complaints from shippers of a lack of available equipment, the port of Shanghai announced a new initiative meant to speed the distribution of empties arriving at the port. The initiative by the port in conjunction with the major shipping lines is another step in the effort to elevate the global container shortage.
The port of Shanghai is opening an empty container transportation center designed to serve the Northeast Asian region. Established through a partnership between the Shanghai International Port (Group) Company and major carriers including Maersk, CMA CGM, and Mediterranean Shipping Company, the center will provide maintenance services for empty containers and accelerate the turnover of empty containers in the port.
As the world’s busiest container port, Shanghai handled more than 43.5 million containers in 2020 and continues to see growth in its volume. During the first six months of 2021, one in six containers moving through Chinese ports was handled in Shanghai. According to China’s Ministry of Transport, Shanghai handled 22.94 million TEU in the first half of 2021, up more than 14 percent versus 2020.
Chinese officials said the center located within the bonded zone at the port would help to address the imbalance between import and export containers. They cited U.S. port congestion, trade imbalances, and logistic hurdles as the factors contributing to the shortage in containers. The goal is to improve the flow of containers as Chinese manufacturers prepare for the busy season leading up to the year-end holidays.
Gu Jinshan, Chairman of Shanghai International Port, said the port was working with the global carriers to address the challenges. Chinese factories they said are in danger of not being able to deliver products to customers in the U.S. and Europe.
Citing a 14-percentage point decline in June on the shortage of containers, the port officials said that they believed China was making progress in reducing the shortage. In addition to the distribution center, China starting last year directed its factories that produce containers to increase production.
Newbuild container output has soared in the first six months of 2021 according to a market analysis by Drewry. They recently reported that China’s dry box output climbed 235 percent in the first six months of the year to three million TEU. Drewry expects full-year production to reach 5.2 million TEU, representing a 67 percent year-over-year increase.
Despite record newbuild output, Drewry commented that “insatiable demand for equipment raised utilization across all equipment types to over 99 percent by the second quarter of 2021, its highest level on record.”
While prices of dry freight shipping containers have doubled over the past year to reach historic highs, Drewry believes they will moderate over the next few years due to the increase in supply and more efforts, such as this one in Shanghai, to manage the flow of containers through the major ports.