Empty containers stack up in Europe as region's economy sputters

Logistics depots around Europe are struggling with backlogged stacks of empty shipping containers as the Euro Zone grapples with an ongoing economic crisis, facing declining trade and therefore a drop in container trade, according to an analysis by Container xChange.

A major hurdle to fixing the imbalance is that that repositioning costs now exceed the asset costs of the empty containers, giving container lessors little financial motivation to move the spare boxes back to Asia.

The problem has been developing throughout the past year, continuing to escalate ever since Hamburg, Germany-based Container xChange flagged the issue in November 2022. The triggers include a string of disruptions that have poured cold water on Europe’s economy, including COVID aftermath in 2019 and later Russia’s war in Ukraine in 2022. Those impacts have left a permanent impact on the EU’s trade with its major trading partners like China, the U.S., and U.K.

“We have a poisonous mix of severely imbalanced container trade with high level of excess inventory in Europe, and at the same time unreliable shipping services, suddenly lacking the vessel capacity to reposition empties out which in turn makes the situation even more difficult,” Christian Roeloffs, cofounder and CEO of Container xChange, said in a release. 

As a result, ports in Europe have experienced consistent month on month low import and export volumes, seen in recent numbers from the port of Rotterdam, Antwerp, and Hamburg, the report said. At Rotterdam, in the first nine months of 2023, there was 6% less throughput in the port with 329.9 million tonnes compared to 351.0 million tonnes in the same period in 2022. The decline was mainly related to the throughput of containers and coal. The container segment itself saw a decline of 8.1% in weight and 7.2% in the number of twenty foot equivalent units (TEUs).

The silver lining to the problem is that conditions are set to improve in 2024, barring an escalation of geopolitical violence, Container xChange said.

“We do hear from our customers that depots are burdened, and the box owners are looking to move their containers to other regions. There is also a rush to reposition containers out of Russia and the prices there are quite low. With recessionary fears on the horizon in Europe, and specifically in Germany, the outlook for 2024 is shaky. But one thing is certain – 2024 will be better than 2023 for the container shipping industry,” Reoloffs said. 

In Reoloffs’ view, the biggest uncertainty is the geopolitical risk that have been destructive for the supply chain industry. 

“The Israel – Palestine conflict have remained a regionally destructive humanitarian crisis and have not yet impacted the European Union's trade and economy. Nevertheless, it is essential to recognize that the container market is highly sensitive to broader economic and geopolitical shifts, as these can substantially influence global trade. The ongoing conflict in Israel holds the potential to affect consumer confidence, manufacturing operations in the region, and ultimately trade volumes emanating from that area,” Roeloffs said.