Rising Shipping Costs Amid Shortages Likely to Effect Exports of Recyclables

Date: September 24, 2021

Source: News Room

As of 2021, the top six shipping container operators control over 70% of all ship container space. In 2016 and 2018, a series of consolidations cut the number of major shipping container companies in half. This was due partly to low business after the 2008 financial crisis as well as a surge in demand as manufacturing in Asia has exploded. This consolidation was exacerbated during the Covid-19 pandemic when outbreaks reduced the number of viable ports available to ships.

According to cargo owners, this consolidation has resulted in higher rates, longer wait times and late shipments. According to shipping container operators, the Covid-19 pandemic has been responsible for new issues due to low manpower at ports, which makes it harder to unload cargo. Spot container shipping rates from Asia to the U.S. West Coast were five times higher last week compared with the same time last year, according to the Freightos Baltic Index. Those rates are more than 14 times higher than during the same period in 2019.

In addition to its effects on the costs of goods in the modern globalized economy, the battle for cargo space and resulting higher shipping prices will likely hurt exports of recyclable materials to Asia while boosting supplies available to domestic processors.

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