Container shippers battle supply chain disruptions

The impacts of the coronavirus on the containerized scrap business has already caused steep drops in trading activity in affected countries which have rippled through to the freight markets.

"The situation is very bad," one freight-forwarder said. "There is no space because inbound is so slow. It's getting harder and more expensive to ship containers; many people are feeling the pinch. We don't have space and what space we have is canceled or rolled. People don't care about the rates they're worried about getting bookings. It's going to continue be like this for at least four to six weeks and it's going to get crazier."

Blank sailings, a shipping term used to describe a canceled sailing by the carrier, have been on the rise amid disruptions to the broader shipping supply chain.

In the trans-Pacific trade lane, blank sailings have more than doubled, according to one freight-forwarder who estimated that there have been more than 100 cancellations in recent months.

The slowdown has been caused by a combination of low utilization rates coming out of China to North America since the start of Chinese lunar new year, as well as supply chain disruption of the coronavirus.

As a result, there are fewer vessels sailing, so it has been more challenging to get bookings, while a global container shortage has posed additional stress on shippers and ports with lack of equipment being seen in major inland ports throughout the US.

Inland shortages of containers have been noted in Chicago, Atlanta, Columbus, Cleveland, Detroit, Fort Worth, Kansas City, Louisville, Memphis, Nashville and Phoenix, according to market participants.

US exporters shipping to the Middle East, India and Pakistan have been particularly impacted by blank sailings from Europe, which have reduced space on connecting vessels.

At the same time, containerized scrap shippers in the US gulf, including Houston, Texas, and New Orleans, Louisiana, have also felt the pinch of blank sailings and reduced container availability.

Not all areas throughout the US have seen tightness with booking and vessel space availability in the Pacific southwest and along the US east coast for all shipments except to the Middle East, India and Pakistan.

Containerized ferrous and nonferrous scrap exports in most regions have unanimously reported issues with obtaining bookings in recent weeks, while rising freight rates have whittled away margins.

But in recent days some exporters have noted that as the impacts of the coronavirus pandemic deepen, demand from overseas buyers has pulled back significantly, reducing trading activity.

"We had issues with bookings but now volumes have dropped so our demand for containers was really high," one US containerized shipper said. "But now the tables have turned and activity has gone down and we don't have much volume this month because suppliers hesitant in making deals."

By Brad MacAulay