What’s causing empty container issues in Melbourne?
As with so many other things that are going wrong, we can put the blame on COVID.
Due to COVID, consumers have been restricted in what they can consume when staying at home in lockdown. As a result, we saw a large shift in consumption of goods rather than services.
Lo and behold, the logistics industry went into a frenzy.
According to Daily Cargo News (2021), at the beginning of 2020 there were 3 million inactive TEU worldwide, and by the start of 2021, that inactive fleet had returned to work.
Why isn’t increased demand a good thing?
Although business is booming, the problem here is the imbalance between Australian imports and exports.
In Australia, we rely heavily on importing products from China, South Korea, Japan, Thailand and the US. In fact, imports account for almost half of Australia’s GDP (46%).
On the other hand, less than 10% of the Australian economy is based on manufacturing. Hence, there is a trade imbalance and we are ending up with a backlog of empty containers.
With rapid growing backlog numbers, this begs the question, ‘why aren’t we sending empty containers back to large export countries?’
Why aren’t we sending empty containers back to where they came from?
There is a large cost involved in moving empty containers.
That’s why it isn’t unusual for empty containers to remain in Australia for long periods of time.
Until containers can be filled, most shipping companies opt to hold them at the ports.
When can we expect things to go back to normal?
We can expect the number of containers in the backlog to begin to lessen once we see a decline in consumer demand.
This could be sooner than expected with COVID vaccines rolling out in the next couple of weeks.
Stay tuned for further updates and reach out to the team to answer all of your industry questions.