Why lower capacity?
From my understanding capacity is down due to COVID mostly. The freight industry is historically a low margin and efficient industry, which means there’s enough equipment to handle a small uptick but not much more. When COVID started, the shipping companies canceled a lot of sailings, but they continued to blank sailings through October even when demand was high enough, claiming that they expected it to slow down again. Of course that been false, but they don’t suffer from these foolish decisions, in fact they earned a lot more with the limited capacity. That capacity has never been reclaimed, mostly because of the interconnected parts that have been slowed down during COVID. For example- warehouses had few workers, which means containers get unloaded in 5-6 days instead 1-2 days. This meant chassis were rented for longer and there were no chassis available to pick up containers at the port. The port, suffering its own shortage of workers, now has a glut of containers waiting to be picked up, and starts refusing ships from docking. Those delayed ships get their next destination much later, causing delays and further issues.
Then you have the containers themselves, we’ve had issues getting hold of containers, again this has to do with minimalist infrastructure and trade irregularities during COVID. Eg. China exports more than it imports, so where do they get containers from? It’s a constant juggling act to get empty containers from let’s say LA back nto China. They need to find a way to get that container back to where it’s needed most, whether sending it empty or through some other way.
This is what I understand based on the shipping issues I’ve experienced and news I follow but I’m sure it’s a lot more complex than what I’m saying. But bottom line the shipping industry is extremely complex with many moving parts and little flexibility, lots of pent up demand, more so from stimulus, suez canal fiasco, it’s gonna take a while for all this to sort out.
Finally on the booking side, when companies realized that their containers were not getting bookings, they started booking a month out or paying insane prices to get the goods in on time.
