A severe shortage of shipping containers at major export ports, notably in Asia, is now seriously disrupting global supply chains and forcing traders to ask counterparties to amend the terms of certain letters of credit (L/Cs).

Meanwhile empty containers are stranded at import ports, mainly in Europe and the Americas, while the crisis is also forcing up container freight costs and exacerbating other costs.

L/Cs amended

One scrap exporter reported that he had a shipment due to despatch in November, but could not get the containers in time and asked the buyers to amend their L/Cs, even though their orders are ready in the exporter's yard.

Sellers at least have the consolation that scrap prices are rising sharply, so buyers will be unable to secure a discount upon amending their L/Cs.

Pandemic impact

The container shortages are an indirect consequence of the coronavirus pandemic and rule changes implemented by container lines.

While China started emerging from the crisis relatively early and Chinese factories resumed production and exports, containers that would normally be returned from ports in import markets have been seriously delayed by coronavirus-related shortages of vehicles and drivers.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.