The global supply chain is facing an unexpected challenge in 2024: a shortage of containers. Despite the significant capacity added by ocean carriers, recent reports and spot prices indicate that container scarcity is a reality. But what does this mean for North American intermodal transportation, and could it lead to a repeat of the chaos experienced in 2021 and 2022?

Current Situation

Import TEUs (Twenty-Foot Equivalent Units): A chart tracking import TEUs by calendar quarter through Q1 2024 reveals that while there have been substantial year-over-year gains, the current volume of import TEUs arriving in the US and Western Canada is not extraordinary. It remains below the peaks observed during the post-pandemic surge, aligning with GDP growth trends.

Capacity Challenges

Unlike the pandemic disruptions, where North America was the epicenter of congestion, the current problem lies elsewhere. Extended voyages around southern Africa and port congestion in the Eastern Mediterranean Sea and North Asia have impacted container productivity. Coupled with unexpectedly strong global demand, this has tilted the balance toward shortage.

Durability of the Shortage 
Peak Season Pull-Forward

Much of the current global demand strength may be a pull-forward effect from peak season, suggesting that the shortage could be short-lived.

North American Factors

Threatened tariff actions on China-originating goods and potential East Coast labor disruptions incentivize importers to expedite purchases. Consequently, the situation may ease later in the year.

Mideast Situation

If tensions in the Mideast calm down and ships can resume sailing through the Red Sea, the crisis may dissipate, albeit temporarily.

Ocean Carriers’ Balancing Act
Inland Point Intermodal (IPI)

The surge in IPI is a focal point for ocean carriers. They aim to turn ISO containers quickly and send them back to Asia for high-value loads. Each day an ISO box spends traveling inland is considered a “wasted” day from the carriers’ perspective.

Leveraging Levers

Carriers have various levers to shift this dynamic, including pricing adjustments for IPI movements relative to port-to-port rates. However, implementing such changes takes time.

East Coast Dilemma

ILA Negotiations: The ongoing ILA (International Longshoremen’s Association) negotiations on the East Coast pose a challenge. During the pandemic, East Coast routings were logical due to shorter hauls and feasible inland truck movement. However, with the ILA contract expiring in September, congestion and delays loom.

Transload Solution

West Coast Transload Activity: Expect an increase in transload activity off the West Coast. While Southern California transloads have been relatively quiet, they are well-positioned to handle the early stages of a surge.

In summary, the container shortage’s impact on North American intermodal depends on various factors, including global demand trends, geopolitical stability, and carriers’ strategic responses. Vigilance and adaptability will be crucial as the industry navigates these challenges.