COVID-19, which has been raging around the world in 2020, has hit the world economy seriously. The epidemic has also had an immeasurable impact on the international container shipping industry: ports in many countries have seen congestion and chaos. The epidemic has greatly delayed the efficiency of the global supply chain.
Specifically about the container routes between China and the US, the earlier concerned situation that the volume would drop a lot has not happened.Instead, the continuous increase in cargo volume has further led to the congestion of container routes, which is far beyond imagination.
In the past, containers from Shanghai to Los Angeles could basically arrive at customers’ warehouses within 20 days since departure. In the second half of 2020, especially the fourth quarter, containers would still be able to arrive at the destination port with 20 days after departure. However, due to the fact that the terminal was congested with ships full of containers, the containers often had to wait on the deck for 7-8 days before unloaded to the terminal yard. So it would totally take at least one month to deliver the container to customers’warehouse.
What causes the above situation? Next, we will analyze in detail the three main reasons for the declining speed of container transportation between China and the United States in 2020.
1. The epidemic has reduced the labor force in American ports.
The epidemic has not been effectively controlled in the United States from the beginning. So far, more than 20 million Americans have been infected. Similarly, the situation of port workers are not better. COVID-19 makes the number of labor force engaged in terminal operation drop sharply, thus directly affecting the loading and unloading efficiency of terminals.The work force at customers’warehouse has also seen shortage caused by the epidemic, and thus the speed and efficiency of unloading can not be guaranteed. Consequently, empty containers cannot be returned to the terminal in time, which in turn affects the return of empty containers to China.
2. Under the epidemic mode, the demand for some products in the U.S. has increased dramatically.
After the epidemic outbreak, on the one hand, the U.S. government has been very inefficient in response. On the other hand, it has issued a large amount of cash to ordinary people as economic stimulus. All these have led to a great increase in the quantity of related products imported from China. For example, the demand for made-in-China masks, personal care products, toys and other products has increased by leaps and bounds. These goods are constantly transported from China to the U.S. through containers. As a result, the volume of containers imported has remained high. This also objectively affects the turnover speed of containers.
3. The delivery capacity reduced by shipping companies resulting in a large number of cancellations of shipping schedules.
In order to control the capacity and stabilize the price, shipping companies have cancelled a large number of voyage capacity. As a result, the number of liners has been reduced, and a lot of container cargo can only be shipped on only a few liner s per week.
Coupled with the shortage of empty containers returning from the U.S., many containers that could have been shipped in time were artificially delayed for weeks or even months, which greatly affected the speed of arrival.
Before the Spring Festival in 2021, under the combined influence of the above factors, the price of Sino US routes reached the peak. In the Chinese market, it’s hard to find the shipping space to many ports in the U.S., and the prices were skyrocketing. The arrival of the Chinese new year finally stopped this momentum, because the arrival of the Spring Festival means that China, the global manufacturing center, would stop operating for about a week. Moreover, the Chinese Spring Festival is the biggest traditional festival for Chinese people, and the recovery of a lot of production capacity may be at least until early March 2021. This Spring Festival has given several major ports in the United States a short respite and adjustment time. Now, nearly a month after the Spring Festival, the price of Sino US routes has not increased for the time being, but has slowly declined. This shows that the volume of goods can not be maintained at a high level after the Spring Festival.
After the unexpected prosperity of Sino US routes in 2020, new competitors are eager to join. For example, several Taiwan shipping companies have invested a lot of money in new ship orders. Perhaps in the near future, the shipping company’s transport capacity will gradually increase. By then, the container shipping market should be stable. After all, a mature and stable market is what all parties expect. We believe that this irrational market in 2020 is destined to be short-term. With a large number of coronavirus vaccines put into use, the normal container transportation speed between China and the U.S. is expected to resume in the second half of this year.