Our current time:

'Container shipping companies are taking world trade hostage'


Due to corona crisis, there is a worldwide shortage of containers and the lack of competition is causing shipping rates to skyrocket. "What is happening now has never been seen."


De Tijd - Marc de Roo


"If you now want to order a container to have goods shipped from China to Europe, you have to pay what they ask. It's like the fish market: the highest bidder wins. The market balance is completely off. There is a shortage of containers and too little space on the ships. Freight rates are three to four times higher than three weeks ago. What is happening now has never been seen." So says Jens Roemer, CEO of the Belgian division of the international forwarding company A. Hartrodt.

The group ships goods from 100 locations worldwide and is the intermediary between the shipper of the goods and the carrier. Roemer has been working in the business for decades and says he has never experienced this situation. "I do not rule out the possibility that this will have an impact on the economic recovery worldwide."


Container shortage

The acute container shortage and the shortage of space on ships is a result of the corona crisis. After the outbreak of the corona virus in China, many countries went into lockdown in March. Production stopped, there was less freight and many containers were parked somewhere. Shipping companies started taking ships out of service and ordered fewer containers because they thought the transport would decrease.

But in July the economy picked up again. Europe and the US again started to consume en masse. Consumer goods exports from China, which had recovered quickly, started to boom again. But that led to a sudden shortage of containers. Many 'boxes' were located far from the ports and in many countries there was a shortage of manpower or equipment to quickly transport those empty containers to the ports. In addition, only 2.5 million new containers were produced in 2019, compared to 4 million in 2018. That is slightly more than the number that disappears from the market every year.


Cashing out shipping companies

For the container shipping companies, the sudden increase in consumption and the rise in freight rates - from China to the US they doubled - is more than welcome. Over the past few years, they've posted monster losses while investing heavily in giant ships. Now they can finally cash out.
The large maritime container carriers (Maersk, MSC, HMM, Cosco, CMA CGM, Hapag Lloyd, OOCL, Evergreen, Yang Ming, ONE) that dominate global container transport through alliances, are taking a 'very creative' approach, can be heard everywhere.
In many cases they choose to take their containers empty again once they have been unloaded in the US. Due to the shortage of containers, it is more lucrative to ship them back to China as soon as possible, load them there and ship them back to the US as soon as possible. The shipping company will receive roughly $4,000 for the transport of a full container from China to the US. In the opposite direction, that is ten times less. In addition, there is a chance that a container from the US in China will still need a few weeks of inspection before it can be used again for export. The bill was made quickly.


Exorbitant rates

Three weeks ago, this phenomenon also emerged in Europe. With the same consequences. Freight rates from China to Europe are now three to four times higher. Roemer estimates that if you want a 40-foot container full of consumer goods to leave China before Christmas, you'll pay about $6,000. Six weeks ago it was $1,500.” On the Chinese spot market, shipments from China to Europe even pay 7,000 to 8,000 dollars.

Also from Europe, shipping companies often prefer to take empty containers with them, rather than fill them here. Europe also has the disadvantage that it has to compete with the US to get hold of containers. Roemer: 'Shipping companies prefer to sail back and forth from Shanghai to San Francisco than from Shanghai to Antwerp. The distance is shorter and they have to deploy fewer ships.' In September, shipping company revenue per mile between Shanghai and the US west coast was three times higher than the average spot rate between Shanghai and Antwerp.


This new business model of the shipping companies is being criticized a lot. Farmers from the American Midwest complain that it is still difficult to get their agricultural products on the boat to China because the shipping companies prefer to return containers empty. A container is on its way for three weeks to and from the remote American interior of 1,000 kilometers.

'The US Federal Maritime Commission has opened an investigation because it suspects that the container shipping companies are abusing their dominant position,' says Olivier Schoenmaeckers of Forward Belgium, the Belgian association of forwarders. 'Due to the cooperative alliances between the shipping companies, there is hardly any competition.'
The European Shippers Council - which defends the interests of logistics players, shippers and retailers - has accused the shipping companies of using the pandemic as a profit machine. The Chinese Ministry of Transport asked the container lines not to implement any further tariff increases.

Can you blame the shipping companies for opting for the maximum profit? 'No,' says Roemer. 'It is understandable that the shipping company uses its container where it yields the most. But through their alliances in which they exchange containers on each other's ships (the consortium model was set up with the approval of Europe, the US and China to make maritime transport services better and more efficient, ed.) they are protected against antitrust law. They control supply and demand to their advantage and that results in sky-high rates.'

Share this article on

ERDO Relocation

Londenstraat 38
2000 Antwerp
EURI 0892.532.533

Contact info