Pandemic Triggered Shipping Container Crisis

First, it was a critical shortage of shipping containers due to the pandemic. Then came a massive blockage in the Suez Canal. Now, Vietnam is facing a sudden outbreak in Covid-19 cases. Authorities had to shut down some provinces and cities for the last several weeks to prevent the virus from spreading rapidly. The lockdowns and restrictions has caused massive shipping delays in many ports, jacking up already-high shipping costs as well as waiting times at berth.

However, lockdowns across the world also meant people were staying home more. Thus, a buying boom, which led to containers falling critically short. This caused delays in the shipping of goods from Vietnam to Europe and the U.S. and drove up prices for businesses and consumers. In particular, the cost of shipping a container from Ho Chi Minh, Vietnam to Los Angeles has reached US$ 8,800 per FCL 40 foot. While rates to New York and Miami currently sit at US$ 11,500 and US$ 12,500 respectively. The risk of supply chain disruption is rising, and export prices/shipping costs will likely rise further.

Freight cost from Vietnam to US:

This week (week 26), despite the sky-high price suppliers are willing to pay; they could not get any containers from Vietnam to Los Angeles, Oakland, Toronto, Chicago and New York. While other destinations such as Halifax, Norfolk, Savannah, Charleston are at high risks of disruption. The situation is getting worse due to the summer demand from the USA and EU.

Chart above: The price has varied a lot through just a few weeks, and most buyers are ready to pay FOB + freight at the time to adjust with the new market reality to ensure their loads can arrive on time.
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