Suddenly there is a glut of empty containers. And prices for empty containers have fallen, in some cases by almost 50%. That’s because the containers are jammed up and not going back to China, due to Chinese COVID shutdowns and the Ukraine crisis.
Now the cost of a container in the US is below what it costs to buy a new one in China. I’m afraid it isn’t low enough for ocean carriers to be motivated to spend a voyage on relocating them. I think they will continue to build up in the US.
The FMC is looking into Chinese control of containers and equipment to move them. Most containers and chassis are produced in China. So says Carl Bentzel, an FMC commissioner.
China certainly has a large stake in production of both containers and chassis. There are three state-owned firms in China that dominate container production. Even with elevated prices recently, it is still about the same cost to buy a new container in China for the voyage to the US, or to recycle one from the West Coast of the US. Even if you would rather recycle an empty container, the ocean shipping firms can affect that balance by refusing to pick empties up at say Long Beach or Los Angeles, or delay their transit by long enough to cause headaches for those who need them by a certain date.
If empty containers build up in the US, tying up chassis as well, that’s a form of industrial pollution. Having to spend large sums for storage yards rather than getting them back to China is an environmental cost that should not have to be borne by US local governments and citizens.
It’s certainly worth an investigation and perhaps some action by the US government.
John Gallagher, Washington Correspondent Thursday, May 6, 2021
The problem with 24/7 operation at ports is that no one wants to pay for it. And that is despite the fact that the costs will probably wind up being added to the import cost and passed on to the shipper and customer.
It seems port executives and supply chain players differ in their view of what’s needed. Terminals and warehouse operators and perhaps even drayage firms don’t think 24-hour service is needed to relieve the current congestion. And the staffing costs of staying open 24/7 would rise, with a lot of potential dead time. It is also hard to find additional trained staff today.
Unions are resisting because they claim the port terminals and other unionized players are not willing to hire more union workers.
And the PierPass is being taken unfair advantage of; apparently some are charging higher fees for using the time slots in the hours outside normal working times. See the second article below, which claims PierPass is only incentivizing adjustments that make them more money, rather than enhancing the flow of goods.
Is it possible for port management to get control of this? It’s doubtful under the current port governance rules.
Perhaps we need even more involvement from the federal government or the FMC to get action.