According to UNCTAD 2020 data, more than 80% of world trade takes place by sea. In the shipment of goods, container transportation is highly significant due to reasons such as saving time and money, having high load-carrying capacity at one time, and being fast and safe. However, the shipping container crisis emerged as a major challenge in recent years, especially during the Covid-19 pandemic, disrupting global supply chains.
What Caused the Shipping Container Crisis?
The
Covid-19 pandemic caused substantial disruptions in almost all industries
worldwide, including maritime transportation. With the outbreak starting in
China in early 2020, production in many countries halted. Quarantines led to
reduced port workforce, extending port handling times. Additionally, ships
traveling from China to the United States and Europe were quarantined for
specific periods due to concerns over virus transmission.
Before the
pandemic, it took 1-2 days for containers to be shipped to inland regions of
the United States. However, due to workforce losses, reduced working hours, and
non-operational trucks, this period extended to one week. As China managed to
control the epidemic quickly and continued production, supply surged. However,
the delayed return of containers to China resulted in a supply shortage,
leading to the China container crisis and increased freight
costs.
The impact
of the container crisis 2021 was particularly severe, with
freight prices soaring by 100-300%, as reflected in the Shanghai Container
Freight Index (SCFI). Goods with transportation costs exceeding their actual
value started disappearing from the market. In Turkey, rising exchange rates
further reduced imports, worsening the shortage of empty containers and
negatively impacting exports.
According
to UNCTAD 2020 data, more than 80% of world trade takes place by sea. In the shipment of goods, container
transportation is very important due to reasons such as saving time and money,
having high load carrying capacity at one time, being fast and safe. However,
container transportation decreased by 5.1% in the first half of 2020 compared
to the same period of the previous year, due to the Covid-19 pandemic.
The
Covid-19 pandemic has caused major changes in almost all industries worldwide.
Serious problems arose in maritime transportation, which is one of the main
stones of world trade.
With
the start of the Covid-19 outbreak in China in early 2020, production in many
countries came to a halt. Due to the quarantines, the number of port employees
decreased and as a result, port handling times were extended. With the belief
that the virus would spread through ports, ships going from China to the United
States and Europe were quarantined for certain periods.
Before the pandemic, it took 1-2 days for the
containers to be shipped to the inner regions of the United States, while this
period was extended up to 1 week due to reasons such as loss of workforce after
the pandemic, reduced working hours, and trucks that were not working.
Continuing production in China, which quickly controlled the epidemic, increased the supply. However, as the return of containers to China was delayed, the supply could not be met, and an empty container shortage emerged. The fact that all containers were reserved by China resulted in an almost 100-300 percent increase in freight prices, as can be seen in the Shanghai Container Freight Index (SCFI) chart in Figure 1. The goods whose transportation costs are more expensive than the price of the goods have started to disappear from the market.
Source: Shanghai Shipping Exchange
Figure 1. Shangai Containerized Freight Index
Container Crisis & China
The global
container crisis is further exacerbated by China's dominance in
container manufacturing. It is estimated that there are around 23-26 million
shipping containers worldwide. However, manufacturing is limited to a few
producers, with more than 85% of global production represented by China.
According to Trade Map 2019 data, Chinese container manufacturers accounted for
68.3% of worldwide shipping container exports and operated at full capacity in
2021 to meet surging demand.
The container
crisis 2022 continued with persistent disruptions, while in container
crisis 2024, ongoing trade fluctuations and logistical constraints still
pose significant challenges to global trade. The container crisis
explained how critical it is to accelerate production, provide
incentives, and offer financial support to manufacturers to mitigate the
ongoing crisis.
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For detailed information on the subject of
technical barriers to trade, you can review the content “Technical Barriers to
Trade”.
