Global Shipping Container Shortage

The Covid-19 pandemic caused a dramatic stir in the shipping industry when it came to container availability, leaving many companies unable to ship products and others stuck with a backlog of empty containers. Frankie Youd follows up on this container shortage and profiles what the future could bring.

As the festive season approaches, many shipping companies are finding themselves in the stressful situation of being unable to ship products and gifts in time for Christmas. This is due to the ongoing issue of the shipping container shortage, which began at the start of the pandemic in early 2019.

Even though gradual improvements have been made, there are still concerns that as consumers’ Christmas orders start flooding in, many will be left disappointed as gifts are unable to be transported.

The shortage of containers primarily came down to lockdown regulations, a shortage of staff, and containers being stranded in key trade locations, unable to transport goods to the desired location. Paired with these original container issues, the UK is also currently facing a shortage of HGV drivers, which saw Felixstowe, the UK’s biggest port, turn away ships from Asia last month.

The current situation

National lockdowns, a shortage of workers, social distancing guidelines, and stunted goods production saw a global shortage of products, as they were unable to be loaded and shipped via containers. As a result, shipping companies began reducing the number of cargo ships being sent out, impacting the usual steady flow of imported and exported products and leading to empty containers not being collected.

To tackle this issue, companies such as Hapag-Lloyd began repurposing reefer containers to allow dry goods, such as shoes and electronics, to be sent to locations in demand of reefer containers. Alongside this, companies are re-using older container models and purchasing as many containers as possible when they come to market.

Almost a year later, the situation is still making newspaper headlines and starting social media debate, especially with Christmas right around the corner. “Christmas tree shortage” “No gifts for Christmas” and a lack of cranberry sauce for Thanksgiving have been breaking news, with many wondering if the container shortage will ever stabilise.

One of the key areas of concern at the moment within the UK is Felixstowe port, where it has been reported that over 50,000 empty shipping containers are stranded

Although congestion eased at the port earlier this year around the summer months, delays and congestion have increased over the last few months due to the Christmas holidays – the busiest period of the year for retail imports.

The gridlock at the port has resulted in problems receiving goods from countries such as the US and China, with thousands of containers clogging up the port.

Speaking in a press release, a spokesperson for the port of Felixstowe said: “The pre-Christmas peak, combined with haulage shortages, congested inland terminals, poor vessel schedule reliability and the pandemic, has resulted in a build-up of containers at the port. The vast majority of import containers are cleared for collection within minutes of arriving and there are over 1,000 unused haulier bookings most days.”

Solutions: What is being done?

To tackle this issue and work towards a solution, Felixstowe Port and shipping companies within the UK are working on close collaboration with suppliers in order to mitigate container problems. Companies are also working on alternative routes to bring goods and products into the country, but this could potentially cause delays and extra costs to shipping companies.

Alongside this, the UK Government’s new ‘supply chain advisory group’ has been working towards finding an efficient and effective resolution to this issue. The group, chaired by Sir David Lewis – the government’s supply chain adviser – will advise the Prime Minister on immediate improvements as well as long term solutions which can be made to the UK supply chain for goods as well as identifying the issues and causes of current blockages in ports.

While discussion groups and government bodies are working towards plans and strategies to assist this crisis, AI companies such as MeetKai are proposing the use of AI. The implementation of AI in the shipping industry would allow for the creation of a collection of models which would facilitate the prediction of the cost of shipping with external variables – such as container shortage – as well as the demand for the item which will be shipped.

As MeetKai CEO James Kaplan told Ship Technology: “In AI you can combine individual models into a meta-model where it allows you to understand shipping costs and understand how demand works. Then you can learn the relationship between shipping cost and demand.

“The nice thing about AI, and just in general about any type of machine learning, is that it’s very easy to test historically. We can go back in time and look at the price to ship a unit across the sea from any route that you want to talk about. We can build a model that predicts that and see how well it’s actually performing.”

The ability to predict shipping costs and consumer demand would not only save costs, but would also reduce the chances of container crises, such as the one the industry is currently facing.

Alongside predictions, AI would also allow the industry to create simulations and monitor how the changes would play out. For example, a company could create a simulation where more cranes were working, or have a port operating 24 hours a day, to see if it would benefit shipping costs and the container shortage issue.

With a notorious reputation for being slower to adopt and adapt to new technologies, paired with the hesitancy and concern around using AI, only time will tell if the shipping industry will embrace AI

“Every day I hear new explanations for why the supply chain is failing right now, it feels like no one has an answer, everyone just makes up a reason. It makes me think that if this system were understood at a higher level, and you had higher level predictions, this wouldn’t have happened,” says Kaplan.

Courtesy: Ship Technology

SLPA Disclaimer: Views are personal do not reflect the opinions and/or views of the publisher

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