Containerized supply chains during Covid-19 – Prof. Lauri Ojala

From the start of the COVID-19 pandemic until now, there has been a remarkable change in global supply chains – from a double-digit percentage fall in demand for ocean-bound shipping to skyrocketing spot freight rates and tensions on container availability for exports in recent months. There is uncertainty as how persistent those effects will be.



  • There are currently unprecedented tensions in global maritime supply chains especially with container shipping.
  • Shift in consumer demand in major markets from services towards goods created a surge in imports from East Asia to Europe or North America, which continues to stretch the capacity of shipping lines.
  • The capacity constraints were compounded in early 2021 by operational disruption in the main West coast trade gateways (LA and Long Beach), due to labor shortages in the port workforce due to the pandemic, with container ships waiting off shore to berth and unload.
  • As a result, the container shipping fleet has no more reserve capacity (idle ships), and spot rates to ship a container have tripled (or more) from the pre-COVID level on some routes. These rates represent the willingness to pay of the marginal last-minute trader. They reflect capacity tensions, not the average paid by regular shippers which typically have entered in long term agreement with carriers.
  • Availability of containers for exporters, also known as repositioning, is also a global problem. The sequence of the downswing and the upswing of capacity in 2020 meant that temporarily empty containers are not where they were needed. Furthermore, pandemic related operating constraints on inland logistics mean that containers are moving slower, so the time from loading an export at the point of production moving it to the destination as an import and unloading it, and returning the empty container has lengthened markedly.
  • Ramping up capacity, skipping seasonal sailing reduction in February 2021 (Chinese New Year), and feeding in new containers will improve availability. However, tensions are likely to remain until summer 2021, as global maritime chains remain very vulnerable, to disruptions at any point in the chain.
  • The unexpected MS Ever Given incident in the Suez Canal in early April 2021 compounded the tense capacity situation in container markets, and further deteriorated their schedule reliability, which is at an all time low in April/May 2021
  • In spite of the spotlight on the oligopolistic three alliances system in global shipping, there is little indication it contributes to the current capacity tension on the major routes.
  • However, container carriers showed record profits in end-2020 and early 2021 due to extremely high (spot) freight rates.

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