Reduction in free days for containers – importers to incur extra costs

29 October 2021

The uneven spread of containers across the globe has been a problem for quite some time. There is a shortage in Asia. In contrast, the ports in Western Europe have run out of space to put all the containers. In an attempt to resolve the issue, shipping companies are now limiting the number of free days for containers. This means many shippers will pay more for container usage.

Uneven spread of containers

Asia has exported many more containers than it imports for years now. This so-called imbalance is a huge problem. Due to the sudden closure of several Chinese ports in recent times, this imbalance has deteriorated at a rapid pace. Globally speaking, Ningbo, Shenzhen and Yantian are the ports with the biggest export/import ratio. In other words, hardly any containers are becoming available for exportation.

In Western Europe on the other hand, there is a major container surplus. The so-called Container Availability Index (CAx) lists the balance of available containers. A Cax of 0.5 is perfect. The index is currently 0.74 for the European market. This is twice (!) as high as last year around the same period, demonstrating that the import flows are gigantic. As a result, there is hardly any room left on the quays and in depots.

Pressure on importers rises

Shipping companies are looking for solutions to restore the availability balance for containers. Right now, they are reducing the number of free days. This means the period shippers can use a container free of charge is being shortened.

The reduction of the number of free days by shipping companies is putting even more pressure on importers. Congestion means there have been queues at terminals and in storage facilities. In addition, there is a major staff shortage. The situation for drivers is no different. This means it takes longer to unload and deliver container contents.

Now, the average number of free days is still 5, after which so-called demurrage and/or detention costs are applied. With fewer free days, shippers will have to start paying these costs more often. Whether this measure from the shipping companies will actually make a difference to the imbalance remains to be seen.