Global trade, a vast network of transporting goods and services from point A to point B, heavily depends on the worldwide shipping industry. This industry, operating on a global scale, faces several challenges, one of which is container imbalance. This issue, resulting from the uneven distribution of shipping storage containers, has significantly increased costs and inefficiencies for the shipping industry and its customers. More importantly, it has disrupted the flow of international trade, affecting the timely delivery of goods and services and creating a sense of urgency to address this issue. 

The pandemic has highlighted this issue, as restrictions prohibited the movements, so there was no moment of ships too thus, supply did not reach the demand.  The process of import, export, and repositioning should always be moving. However, due to some issues, like the COVID-19 pandemic, this process stopped causing the container imbalance.

What is container imbalance in the shipping industry? 

The simplest definition of container imbalance is the significant mismatch between capacity and demand. It is a significant challenge in the shipping industry. It can lead to excessive container imbalance charges (CICs) and significant business financial loss. The imbalance of containers mainly occurs because of two reasons: 

• When there is excess cargo to ship but you require more ships. 
• When excess ships are available, but there is no cargo to ship. 

Efficient container management is crucial for reducing costs and ensuring supply chain harmony. These two conditions arise when products packed in containers are transported from one place to another. The same ship has to return to its origin with no goods, like an empty truck returning; it does not pay. If the containers in the ship are used to carry goods to their origin despite returning empty, there would be no imbalance. Containers must move smoothly and efficiently from one place to another to ensure supply chain harmony. 

Causes of container imbalance

Container imbalance affects the global trade chain, so it is worth considering. To find the consequences, we need to understand why it occurs. 

1. Imbalance of trade: Trade imbalances imply that countries with high exports and fewer imports often face the problem of an excessive supply of containers. Similarly, countries with high imports most probably face a container shortage. Containers need to return full of goods to ensure no imbalance of containers. 

2. Economic factors: Economic factors such as recessions or booms affect container imbalances, as these global economic problems affect global trade, and the shipping industry is a significant part of global trade. Therefore, they will affect the container’s balance. Tariffs, trade policies, currency fluctuations, and commodity price changes are all causes of container disbalance. 

3. Operational inefficiencies: Inefficient port logistics or transportation processes also lead to operational imbalance. Inappropriate transportation infrastructure, custom delays, and ineffective pot operation exaggerate this problem. 

4. High shipping rates: Repositioning containers and returning ships with empty containers cost high shipping charges and fuel expenses that are very difficult to manage. An easy response would be to choose a location with fewer shipment charges and try to make smaller shipments. 

5. Space problem: Container depots and their role in the shipping industry are concerning. Containers sometimes cannot carry enough cargo as they need to export, leaving them at the port as the ship becomes heavy or overfilled. The size and infrastructure of depots need to be well-developed for storing the cargo containers. One way out of this problem is to transport less cargo and use the relevant container type and size. 

6. Weight of cargo: Ships with heavy cargo tend to move slower, resulting in delays while loading and unloading the cargo. Apart from this, ports and shipment delays also add to this issue of container imbalance. 

Effects of container imbalance

Container imbalance has a lot of effects on the shipping sector, which involves an increase in the cost of shipping lines because of the repositioning of empty containers to the locations where they are needed, inappropriate efficiency, increased container rates, and cargo transportation delay. Now, we will understand them in detail: 

1. Increased shipping rates: When there are excessive empty containers in one location and significantly fewer in other locations, shipping industries have to transport these empty containers where they are in demand. This process is called “repositioning”. This extra cost is derived from the customers, increasing shipping rates. 

2. Delay in shipping: In certain regions, a container shortage leads to shipment delays. Consequently, products are left trapped at ports and warehouses. These delays disturb the supply chain, increasing the time needed to deliver goods to stores and customers. This causes a shortage of stock, dissatisfied customers, and missed sales opportunities. 

3. Impact on the environment: Container imbalance impacts repositioning or moving containers around different places using fuel that produces harmful carbon emissions. This further movement contributes to climate change and air pollution, therefore increasing maritime companies’ total carbon footprint. 

4. Disruptions in the supply chain: Supply chain harmony depends on the timely availability of containers to supply goods. Imbalances cause disarrangement and disruption, which leads to forecasting and managing logistics. These container positioning disruptions affect delivery management, manufacturing schedules, and inventory management. Thus, it is difficult to meet demand, leading to unhappy customers and financial loss. Alarming supply chain disturbances affect global trade. 

5. Operational inability: When containers are not at their designated places, shipping industries cannot properly use their resources. Ports become overcrowded, and ships sail with empty slots, stressing the logistic experience. The inability to conduct operations affects the container storage logistics department, making the shipping business less efficient and profitable. 

Management strategies 

Repositioning empty containers is a task of consideration in the shipping industry, but effective management strategies can help you overcome this problem of container fleet management: 

1. Use forecasting and planning: You must be as farsighted as possible in this shipping business. The market is the epicenter of the fluctuation, so it is very important to know about the changes and how they can affect you. 

To avoid port congestion and delays, check the market forecasts as often as possible. You can use data analytics and forecasting tools to check container requirements. This will help you plan for sudden shortages, manage repositioning, and ensure that containers are available where needed. 

2. Technological solutions: Technology offers a reliable solution to the problem of container imbalance. The container is not visible to the owner 20 to 40 percent of the time. So, one can install IoT devices in containers to track and collect data in real time. E-businesses can help with automation, financial profit, customer satisfaction, and productivity improvement. 

Digital marketplaces can also help reposition these empty containers. On online platforms, one can easily find containers unloaded near their location, and shipping companies can find customers who want to transport their cargo near the unloaded location. 

Economic implications 

Due to container imbalance, the shipping industry has many economic implications. These include high operational expenses due to container repositioning, increased shipping rates, inefficiencies, and delays leading to profit-cutting, disturbed supply chains, and impacts on the trade balance and CIC charge in shipping. Some technological developments and strategic planning can increase the profitability and productivity of the shipping sector.

What are container imbalance charges?

Container imbalance charges(CICs) are levied by shipping companies to compensate for the cost of repositioning empty containers. These fees balance the financial and logistical burden of transferring products from excess supply to where they are needed. This includes repositioning costs, container handling charges, freight rates(goods), detention fees(charges for staying at the port), per diem charges, and an imbalance surcharge. 

Importance of CAx for container imbalance: 

The Container Availability Index (CAx) is a metric that provides information about the supply and demand in a particular region or trade route. It estimates the ratio between the number of containers in use and the present demand for containers, measuring the availability of containers. This index benefits the industry as it helps stakeholders identify and resolve imbalances. 

Working of CAx

• When the CAx value is 0.5, the number of cargo containers leaving and entering the port is the same. If the CAx value is more than 0.5, then the number of cargo-filled ports entering is greater than the number leaving. If CAx is less than 0.5, more cargo-laden ships have left the port. 
• If CAx is low for several weeks, it shows a low availability of containers. However, if CAx is high for several weeks, excess containers are available at a specific port. 

Ways to avoid container imbalance

It is very important to avoid container imbalance if you want efficiency and profit in the shipping industry and get rid of container imbalance. Here are some ways that can help you to do the same: 

1. Precise demand prediction: Use advanced supply chain analytics and forecasting tools to understand container demand precisely. This will help you plan your transfers of containers accurately.

2. Collaborate with other logistics: Collaborate with various logistics companies to share your container resources. This would maximize container usage and minimize the need for container repositioning, resulting in cost savings and efficiency. 

3. Container leasing: You can lease containers from websites such as LOTUS Containers. If you lease shipper-owned containers, you will have more control over managing your containers. So, container leasing, proper redistribution, strategic planning, and market flexibility can prevent imbalance. 

4. Improved ports and terminal operation: It is very important to have a good infrastructure of ships, containers, and ports. So that they can provide the space to adjust the cargo.

Container imbalance is a serious issue in the shipping industry, resulting in inefficiencies, higher prices, and disruption to the global commerce network. This problem has many reasons, including economic fluctuations, trade imbalances, high convenience charges, execution inefficiencies, space limitations, and cargo weight. The result of container imbalance is high shipping costs, environmental destruction, delays, and supply chain disruptions. 

It is very important to highlight management solutions for container imbalance. Prediction tools, technologically advanced tools such as IoT devices, and partnering with other logistic companies can solve this issue. The container availability index (CAx) can provide insights to enhance container management. These tactics would improve costs, increase efficiency, and lead to smoother operations of the container business. 

LOTUS Containers manufactures, leases, and sells one of the best containers, along with maintenance services, so if you need containers for your excess cargo, contact LOTUS Containers.