Rob Handfield, Bank of America Professor of Supply Chain Management with the Supply Chain Resource Cooperative in the Poole College of Management at North Carolina State University, discusses the reasons behind the current worldwide shortage of ocean containers, and what carriers and manufacturers must do to solve it.
The huge volume of product that the U.S. buys from China is a major reason for the current shortage of both ocean containers and certain imported consumer goods, Handfield says. Containers filled with import cargo travel to inland points within the U.S., then become difficult to retrieve for re-loading with export products headed back to China. Trans-Pacific ocean carriers are therefore preferring to transload the contents of import containers on the West Coast into domestic equipment, then immediately return the international boxes to China for another import load. As a result, U.S. exporters, especially of agricultural products, are finding it difficult to obtain the containers needed to get their goods to overseas markets.
Another culprit behind the current shortage is the mega-containerships that have been an increasing presence on the global shipping scene in recent years, Handfield believes. “Ships are getting larger and larger, and slower and slower,” he says. These days, it can take four to six weeks for an American importer to receive its goods from China or elsewhere in Asia. “That’s like working capital sitting on a ship. It’s not earning you money.”
Handfield says carriers and logistics providers need to be thinking about ways to speed up the flow of cargoes in international commerce. One possibility is to shift the manufacture of goods bound for the U.S. from China to Mexico, which offers both low-cost labor and proximity to American consumer markets. Such a strategy would eliminate big containerships from the supply-chain equation altogether.
Timely, incisive articles delivered directly to your inbox.