Container Shortage: Why Freight Rates Rose and What to Do

Container shortage is the plain reason many shipping quotes keep rising: boxes are not where buyers need them, and ships are not arriving when carriers promised. For importers and exporters in Vietnam, the fix is not a trick. It is earlier booking, honest buffers and a closer read of the fine print.

What is happening right now

Containers are not gone. Many are stuck on ships that run late, in yards that are full, or in the wrong country. When a box returns to Asia a week or two later than planned, it is not there for the next exporter. Space on ships then fills fast, and carriers charge more for it.

Demand for goods has also been strong in many markets, so more boxes have to move at the same time. The result is a squeeze on both boxes and ship space.

Drewry, a shipping consultancy, publishes a World Container Index every week. It tracks the price of moving one 40-foot container on major east-west routes, including Shanghai to Los Angeles and Shanghai to Rotterdam. It is a useful benchmark when you want to see whether your own quote is fair.

Sources: Drewry World Container Index page (drewry.co.uk).

Why freight rates rose

Rates follow a simple rule. When fewer boxes and slots are free, buyers bid against each other. Carriers can sell space to whoever pays most, so spot prices climb quickly.

Delays make this worse. A ship that arrives late holds its berth, its boxes and its crew schedule hostage. The next ship then starts late too. Lines try to catch up by skipping ports, which leaves cargo behind.

In late March 2021 the Ever Given, a very large container ship, blocked the Suez Canal. It ran aground on 23 March and was freed on 29 March. By 28 March, 369 ships were waiting to pass. That blockage was short, but it added to a system that was already running late.

Sources: 2021 Suez Canal obstruction, Wikipedia, citing BBC News and The Guardian, 29 March 2021.

What the schedule data shows

Sea-Intelligence tracks how often container ships arrive on time. In January 2021, global schedule reliability was only 34.9 percent. That was 33.5 percentage points lower than a year earlier. Late ships were on average 6.42 days late.

The latest full month published is April 2021. Reliability was 39.2 percent, down 1.0 point from March and 30.6 points below April 2020. Late ships were on average 5.68 days late.

In plain words, roughly six ships in ten were arriving late. When most ships miss their dates, no shipper can plan a delivery to the day.

Sources: Sea-Intelligence, 26 February 2021; Sea-Intelligence, 31 May 2021.

What it means for Vietnamese importers and exporters

A factory that exports from Vietnam depends on boxes arriving at the port on time. A shop that imports depends on the ship arriving close to its date. Both now face more risk on price and on timing.

Three costs matter most. First is the base rate. Second are the extra charges, such as peak season or congestion fees. Third is the cost of waiting, when stock is late and a customer cancels. Many buyers look only at the first number. Ask for all three.

Read each quote for how long the price is held. A rate that is good for three days is not a plan. A rate held for the whole booking window is worth more than a slightly lower rate that can change.

Sources: Reasoning by the editors from the data above. Not a forecast of future rates.

Practical steps to take now

Start with these steps. None needs special software.

First, book earlier than usual. If you booked two weeks ahead before, ask your forwarder what a safer lead time is now, and move your order dates to match.

Second, build a buffer. Hold a little more stock for your fastest-selling items. Weigh the cost of storing it against the cost of an empty shelf.

Third, ask for the whole price in writing. List the base rate, every surcharge, the date the rate expires and who pays if the ship is rolled to the next sailing.

Fourth, split large orders. Two smaller shipments on different sailings spread the risk of one late ship.

Fifth, talk to your customers. Give them a date range, not a single date. Most accept an honest range over a promise that is missed.

Last, compare your quote with a public benchmark such as the Drewry index each week. If your price moves far from the trend, ask your forwarder why.

Sources: Editorial guidance. For regulations on customs and import documents, check the official notices of the Vietnam customs authority before each shipment.

Sources

• Sea-Intelligence, 26 February 2021: global schedule reliability, January 2021.
• Sea-Intelligence, 31 May 2021: global schedule reliability, April 2021.
• 2021 Suez Canal obstruction, Wikipedia, citing BBC News and The Guardian, 29 March 2021.
• Drewry World Container Index: what the index measures.