As previously mentioned, demand for ocean shipping has maxed out carrier capacity, and carriers are turning bookings away for shipments out of Asia, a major source of Globally Sourced Steel Pipe. Containers are piling up at ports, with 40′ storage containers becoming unavailable. 20′ containers are available, but in short supply and double the normal price.
Recently, average container turnaround times have skyrocketed from 60 days to 100 days due to Covid, specifically handling capacity cuts in Europe and the United States. Availability of shipping containers are tight, and this will likely persist until a coronavirus vaccine is rolled out at a large scale and global travel returns to normal levels. Because of lockdown measures in ports across the world, containers are piling up up in ports, contributing to delays in containers being returned to Asia where exporting is high. Container manufacturers have provided relief with additional units being made to keep up with demand, but they are likely to face the same shortages of raw materials (like steel, floor timber) and personnel availability that other industries face.
With shipping container availability limitted in Asia, the cost of freight is rising. Importers are now paying three times more than normal, while still suffering delayed delivery times. Securing ocean freight for containers has become very, very difficult.
Even parts of the PVC supply chain are affected. Raw materials like PVC resin are shipped in containers, and those exported containers are being delayed because of container shortages. Containers aren’t returning to exporters quickly because of delays at receiving ports, especially rail terminals. Containers that need to be discharged onto rail lines for transportation are being delayed by up to three weeks. Sometimes, PVC resin shipments are cancelled because shippers want to make room for more valuable material, such as consumer goods. This unprecedented combination of market tightness and volatile freight costs may be the main factors pressuring PVC market discussions right now, as opposed to a robust recovery and high demand like other materials.
With all of this considered, container freight rates from Asia continue to surge, reaching highs far in excess of long-term sustainable levels.
How We Can Help:
As we face extreme volatility in the commodities market, remember that Merfish United’s business model is designed for low and unpredictable volume scenarios, exactly like the one we are in right now. With us, wholesalers can buy a broad array of pipe products from one supplier, at low minimums for FFA.
We keep our stock high, so use us to help manage your inventory and buy what you need, when you need it. Mix-and-match Copper Tube with Steel Pipe, PVC Pipe, Conduit, Strut & Rod to make our low weight minimums on your next weekly order.
- “Ocean carriers push shippers to use 20-foot containers with 40-foot in short supply.” Supply Chain Dive.
- “Boxed out: China’s exports pinched by global run on shipping containers.” Hellenic Shipping News Worldwide.
- “Rates for shipping containers continue to skyrocket amid shortage in Asia.” Hellenic Shipping News Worldwide.
- “Rates for shipping containers continue to skyrocket amid shortage in Asia.” ICIS.com
- “Container freight rates from Asia surge to new highs – ‘it’s gone mad’.” The Load Star.