Shipping container shortage continues to threaten pulses

Container availability continues to be a problem for shippers of pulses and special crops, say industry officials.

Ritesh Ramakrishnan, joint managing director of Transworld Group, a shipping and logistics conglomerate that primarily services markets in India, the Middle East and Southeast Asia, said COVID-19 has upended the ocean freight business.

There has been a 20 to 25 percent drop in the volume of goods handled by the shipping sector as a result of the pandemic.

Container ship operators have idled an estimated 13 to 15 percent of their capacity in the last month, Ramakrishnan said during a webinar organized by the Global Pulse Confederation (GPC).

That has taken about three million containers out of circulation.

About 30 percent of Canada’s pulse crops are exported in containers. There are mounting concerns whether the container issue will sort itself out before the new crop harvest starts in August.

Stephen Paul, vice-president of supply chain logistics with Canada’s Ray-Mont Logistics, said the situation is far too fluid to have a definitive answer to that question.

If North Americans return to work and resume traditional shopping habits by July 1, he thinks the container shortage and backlog issue should be resolved in time for new crop shipments in late summer and early fall.

“But if this continues to move forward past July, every week that goes by is going to start to affect the ability to move the crops,” Paul said during the GPC webinar.

He said there has been an increase in demand for the movement of pulses as concerned grocery shoppers stockpile products like beans and lentils but logistical constraints are impeding trade of the commodities.

There has been a tremendous amount of “blank sailings” or cancelled container vessels from China to North America and other destinations in the past two months.

People are not buying the consumer goods that China manufactures and ships around the world. That means there are precious few empty containers in North America available to be filled with goods like agricultural commodities for the backhaul trip to China.

“We’re probably running at about 50 percent capacity on shipments going to Asia and Southeast Asia,” said Paul.

Mahim Sharma, head of shipping and logistics at Glencore Agriculture India, said imported containers are stuck at terminals in Indian ports. Deliveries of those containers are 20 to 30 percent of what they once were.

The majority of Indian ports have declared force majeure, meaning unforeseeable circumstances are preventing importers and exporters from fulfilling contracts. Ports still operating have limited capacity.

“The majority of operations in India are still labour intensive,” he said.

Many port workers and truckers are unable to report to work due to COVID-19 restrictions.

Paul said the container shortage issue is going to linger until North Americans return to work and start buying consumer goods.

Even when that occurs there will likely be a six-week lag before there is a free flow of containers because there is a huge backlog of loaded containers sitting at port position waiting to be placed on ships.

Chris Oliver, nautical director of the International Chamber of Shipping, a group that represents 80 percent of the world’s shipping companies, said it is hard to comply with many of the new COVID-19 rules and regulations.

“All of this is slowing down the whole transportation process,” he said.

“There are clearly longer waiting times in ports because of this.”

Ships may completely bypass certain ports if they don’t have a big volume of containers to drop off at that port rather than risk sitting at anchor for an unpredictable number of days.

All of the panelists on the GPC webinar anticipate rising protectionism as countries attempt to secure food supplies and there could be a temporary shift away from just-in-time inventory to stockpiling essential goods like food products.

But Oliver said people tend to have short memories and the supply chain will eventually revert back to a just-in-time system due to economics.

Ramakrishnan said there may be attempts by India and South America to replace portions of China’s massive manufacturing sector if the pandemic drags on.

That could cause a supply shock in the container industry. But he noted that replacing China is a tall order.

There could also be a shift out of containerized shipments into bulk transportation of commodities like pulses because container rates have been rising despite vastly reduced fuel costs.

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