The pandemic can sometimes act as a stone in the gears of globalization. Chinese exports, almost as important to global supply chains as oxygen for breathing, are facing a rare perfect storm that threatens to damage the jewel in the Asian giant’s crown and jeopardize the investments of some of its customers. The spectacular recovery of orders from abroad in recent weeks, the stoppage in the manufacture of containers, and the fact that many of them have been stranded in Europe empty after traveling in the first half of the year and not returning is causing a unusual shortage of containers. That, coupled with the problems caused by the pandemic in ports, is preventing shipments from arriving on time, and has skyrocketed prices to unprecedented levels: from about $ 2,000 for a forty-foot container a couple of months ago, to the 12,000 that according to sources in the sector have been collected in remittances to England.
“As markets reopened in the fourth quarter of 2020, there was an increase – above expectations – in the replenishment of stocks, especially in the US and Europe, which has led us to the current situation of congestion in ports, ”explains Concepción Boo, press officer for the Danish logistics company Maersk, which has one of the largest fleets in the world.
“Everything is sold for the next few weeks. Our ships are so full that there is no room for a mouse, ”jokes on the phone Nils Haupt, of the German shipping company Hapag-Lloyd, also among the largest. Its 234 ships have cargo assigned for a while, and their case, far from being a rarity, is now normal. “People in the US and Europe have money thanks to government aid programs, they can’t travel, they hardly go out to dinner or buy tickets to events, so they sit for many hours at home and want to improve it: we transport a lot of furniture , sofas, beds, televisions, video games and sports equipment such as bicycles, “he says. To that list are added the sales of sanitary protection material, of which China is the largest producer.
To Rafael Cascales, executive president of the Spanish Association of Foreign Trade Professionals (Acocex), these arguments sound like an excuse. An importer with experience in the Asian market through his company, Casico, blames the shipping companies for intentionally not having replaced the frequencies or the number of containers prior to the pandemic. “Exports have remained active since the recovery in summer. And they could have taken the opportunity to send empty containers as has always been done, perhaps it is an attempt to recover what was lost in the first semester ”, he accuses.
Shipping companies, for their part, insist on blaming the problems on exogenous factors: “The measures to contain the pandemic affected global supply chains by reducing the number of ships and containers available. And productivity was reduced in ports around the world, in warehouses and in dry ports, “they say from Maersk. Nils Haupt, from his German competitor, agrees, and recalls that both port personnel and transport by truck and other routes have suffered from the casualties caused by the covid, quarantines and disinfection work, which has contributed to increase the waits to unload merchandise – of up to ten days in ports such as Los Angeles in the United States, at whose entrance there have been queues of 40 ships with tens of thousands of containers on board. The delays have pushed shipping companies to raise prices for that overtime. “Now everyone wants containers. Customers ask and ask. The whole system is under a lot of pressure at the moment, but we need much more time than before to return to China with empty containers, “says Haupt.
The change has been noticeable. From the traffic freeze due to the economic hibernation in the spring, to a pronounced rebound since August due to the reactivation of the economy in Europe. “The months of hiatus have turned to the second semester, which has practically assumed the volume of one year, with the consequent bottleneck”, explains Rafael Cascales.
Panic in the market
The shortage of containers has already generated panic in the market: there are exporters who prefer to make two reservations for the same shipment due to the fear of running out of space, artificially increasing demand and further worsening an already exceptional saturation.
The calendar has not helped either. The proximity of the Chinese New Year celebrations has accelerated the search for holes to avoid being stranded for holidays. And the purchases for the arrival of Christmas have inflated the orders. Chinese exports grew an overwhelming 18.1% in December, with a trade surplus of 535,000 million dollars (443,000 million euros), the highest in five years. The Asian giant thus closed the year with a GDP growth of 2.3% despite the pandemic, the only economy developed in green.
From Maersk they claim to be moving heaven and earth to improve delivery times: they reposition ships, change ports to avoid traffic jams and have all their ships and containers operational.
For many, however, the damage is done. In a letter sent to the European Commission, the CLECAT and ESC associations, representing freight forwarders, logistics operators, customs and shippers, place all responsibility on the shipping companies. They reproach them for putting the economic recovery at risk by breaching contracts, arbitrarily canceling exits and imposing irrational conditions and rates higher than those agreed. They are blamed directly for damaging many small European businesses, taking as an example a French electric bike shop, on the verge of closing for not receiving the parts it needs to sell its product in time. Also to other large cosmetic, automotive, or information technology companies, highly dependent on goods produced in China.
“There are companies that have stopped manufacturing after the first week of January, which has left importers and half-done productions stranded,” Rafael Cascales laments. Other firms have raised prices to importers or have seen their margins evaporate entirely. “Another slab on their backs after the covid”, affirms the president of Acocex, who has also detected “an avalanche” of search for alternative suppliers in Portugal, Turkey and Morocco to replace China due to the increase in costs.
How long will this last? “The situation is expected to improve once production returns to normal levels and the distribution of vaccines becomes general, returning calm to the markets,” they predict from Maersk. Haupt, from his German rival Hapag-Lloyd, is more graphic: he believes that credit cards will not keep up with this rate. “Nobody thinks this can continue. People can only buy a sofa ”.
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