The container shortage in Asia continues. The cost of container transport from Asia to Europe has risen significantly in recent months. This comes at a time when EU stainless steel buyers are facing long delivery times and rapidly rising prices from local producers. The products most affected are 300 and 400 series cold-rolled coils.
Customers try to source stainless steel from outside the EU
As a result, customers are increasingly seeking to source material from third-country suppliers, despite the EU’s current import protection measures.
However, when purchasers are able to source steel from an overseas mill, they face transportation difficulties – a byproduct of the coronavirus pandemic. This includes an exponential increase in transportation costs as very few containers remain available in Asia.
Freight rates of around $10,000 now commonplace
Freight rates of around $10,000 for a 40-foot container are now common for shipments between Asia and the EU. Several European market participants suggest that it would be cheaper to send an empty container to the Far East to pick up the material.
Such significant increases in transportation costs are difficult to absorb, especially at a time when stainless steel prices are also rising rapidly. In addition, the lack of container availability in Asia is causing delays in getting the material through.
Container shortage: Ports prioritize unloading
The Covid-19 outbreak has led to a shift of containers around the globe. During the first wave of closures in Europe, early last year, containers from Asia were still arriving at docks.
However, with markets closed at many destinations and the manufacturing industry shut down, many ports struggled to process incoming shipments.
Some prioritization of unloading, based on contents, was taking place. Vessels arriving with large loads of PPE and medical equipment were often unloaded first.
Delays in shipping empty containers to Asia.
Many ports around the world continue to struggle with reduced staffing levels as the number of viral infections and strict quarantine regulations limit the number of staff on site.
The situation at UK deepwater ports has been exacerbated by a pre-Brexit surge in purchasing activity combined with the first post-Brexit problems in EU-UK trade.
This has led to ongoing delays in shipping empty containers back to Asia.
Stainless steel buyers expect EU disruptions to continue
Many stainless steel buyers believe the disruptions and high freight costs will continue through the first half of 2021. A pause in production during the Chinese New Year holidays could encourage some shipping companies to send empty containers back to Asia.
However, the speed at which the current situation returns to normal depends on many factors. These include the successful introduction of vaccination programs, the easing of travel restrictions and a return to normal activities at destination ports.
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