The global shortage of empty containers has reached Latvia as well, according to companies active at Riga Freeport.
The freeport authority’s Public Relations and Marketing Office head Liene Ozola mentions that the shortage of empty containers is the direct consequence of the Covid-19 pandemic. Industry experts said that under the pandemic the traditional logistical chains were affected the most in the container industry.
As a result of this, the entire world, Baltic States included, now suffers a shortage of empty containers.
Ozola explained that the shortage was first felt around the start of 2020, when Covid-19 pandemic caused a full stop of the economy in China. Because of this pause, Europe did not receive containers full of goods from China. Now China and other Asian countries have a shortage of empty containers to export goods. Meanwhile, USA, Europe and other countries continue battling the pandemic and related restrictions. Countries lack labor force and infrastructure for quick processing of goods. This slows the return of empty containers to their original senders.
Entire logistical chains are now ruined because of the shortage.
SIA Riga Universal Terminal CEO Janis Kasalis says the shortage of empty containers is not a problem for just the Baltic region or Europe – it’s a problem for all exporters around the world.
“Singapore group Portek, of which Riga Universal Terminal is part of, operates globally. No matter where you look – Asia, Africa or America – everyone has a shortage of containers. The cause for this problem is the restrictions imposed as a result of Covid-19 pandemic in various regions of the world and slower economic activity,” says Kasalis.
“What we see now in the container transporting sector is inertia. Even after Covid-19 pandemic it will take a long time for logistical chains to recover to the pre-crisis level. The shortage on the empty container market and other related problems will remain at least until the end of the year or longer,” says Janis Kasalis.
Experts say the prices of containers have gone up because of the shortage. This also causes container freight rates to go up. SIA Baltic Container Terminal board member Dmitrijs Kiselevs mentions that container freight rates have tripled and even quadrupled since last year. The shortage of containers and increased freight rates represent a big problem for exporters in Latvia. This has made it economically inefficient to send low added value freights in containers.
For Riga Freeport, for example, the shortage of containers and consequences from it take the form of stagnation of container freights. Riga Freeport market analysts say that the entire region’s port turnover indexes are similar – first there was a drop in container freights in the second and third month of 2020, followed by increased turnover in Q4, and now with Q1 2021 there has been another drop in container freights at most ports in the area.
The freeport authority notes that the fact that in this container crisis Latvian exporters are actively looking for ways to send freights to far-away regions – China, America and the Middle East – opens up new opportunities for Riga port in other freight segments. Terminals operating from Riga port offer consolidating freights that were previously sent in containers, such as timber, and sending them to far-away markets using freight ships, since organizing freight this way is now more economically efficient.
At the beginning of February Riga port company SIA KS Terminal loaded up a ship of impressive size with timber to be exported to USA.
“We hope this first project with a shipment of timber to USA will serve as a signal for Latvian timber manufacturers and exporters to unite, consolidate freights and send them directly to American and Chinese markets. The port terminal can provide freight processing, consolidation, storage and other manipulations for the purposes of logistics,” says KS Terminal board chairman Eriks Ceseiko.
Liepaja and Ventspils port representatives admit that even though the shortage of empty containers is a problem, the terminals active within their respective territories are not affected by all that much, because the volume of container freights they process regularly is relatively small. (BNN/Business World Magazine)
