May 2021
What Container Imbalance Fees
Mean for Your Bottom Line
There is always a cost to doing business, right? You need to spend money to make money, and all of that? Sure, there’s some truth there. But that doesn’t mean that every new cost of doing business goes down easy. Container imbalance fees are a great example of this in the importing/exporting industry. It’s a perennial problem, and one that’s very much part of doing business today.
That does nothing to take the sting out of incurring these fees, though.
In this article, we’re going to cover what container imbalance fees and charges are, why they’re currently such an issue, and our #1 tip for keeping those fees to a minimum. Maybe someday we’ll have a global supply chain that runs perfectly and at peak efficiency. Until then, situations like our current global imbalance will continue to cause ripples throughout the industry.
What Exactly Is a Container Imbalance?
In an ideal situation, there is no shortage of containers anywhere. There is also no stockpile of containers everywhere. All containers would arrive at their destination, get loaded back up, and be sent back on a return voyage. The reality of the situation is, unsurprisingly, much different. This is due to the fact that imports and exports rarely match up perfectly.
If a container arrives in a country or in a port where there isn’t anything that needs to be shipped back, then that container is just going to sit empty at that port or in a warehouse. That means one less container in circulation, and an imbalance as containers stack up in these spots. This also leads to issues with warehouse capacity being maxed out, further complicating matters.
How Does That Result in Fees and Charges?
Just because a container imbalance has left any given country or port without the containers that they need to do business doesn’t mean that those countries or ports can just let their business grind to a halt. We’re talking about worldwide importing and exporting here. The show must go on. And that means that importers, exporters, and freight forwarding outfits need to pay to get the containers they need where they need them.
The fees that they need to pay, including the CIC (container imbalance charge) can be quite hefty. In fact, the Boston Consulting Group reports that the “costs of repositioning empty containers in scenarios such as this one are far from trivial,” amounting “to as much as $15 billion to $20 billion per year industry-wide.” Those costs everyone from container carriers and leasing companies to logistics firms importers/exporters.
Why Is Container Imbalance Such a Hot Issue?
As we mentioned above, container imbalance charges and fees are nothing new. It’s a perennial problem, and countries like China, which is a major manufacturing hub, often face container imbalances. The reason why container imbalance is such a topic of conversation right now is the same reason why so many other issues are in the limelight: the effects of Covid-19.
You don’t need us to tell you just how profound an impact the global pandemic has on supply chains and global logistics. It’s no exaggeration to say that Covid has left pretty much no link in the global supply chain untouched. Throw in major manufacturing disruptions and the disparity in imports and exports we’ve seen, and you have a recipe for a serious headache. This is all in addition to overall trade growth worldwide.
What Can I Do About Container Imbalance Charges and Fees?
You can’t really guarantee that you’re never going to be in a position where you’ll run into the need for containers that just aren’t readily available. Even when a global pandemic isn’t totally upending our industry, unavoidable factors like seasonal change can lead to container imbalance issues. There is no insurance premium that you can pay which will absolve you of any risk here.
What you can do is be as diligent as possible in ensuring a strong, reliable supply chain in your business. We’ve written previously about the importance of supply chain visibility, and keeping your container imbalance charges to a minimum is another reason why this is so vital. Communicate with your supply chain and maintain as much visibility as possible, and seek out professional supply chain maintenance if you haven’t already.
Limit Your Container Imbalance Charges as Much as Possible
Whether in business or in your personal life, nothing gets under your skin quite so quickly as additional surcharges. And when you’re looking at fees as substantial as those that come with container imbalance scenarios, you want to do everything in your power to encounter them as infrequently as realistically possible.
When the pandemic recedes and business is looking a little normal, container imbalances and the associated charges and fees will still be there. Fortunately for you, JF Moran will still be here, too. Contact us if you’re looking for worldwide logistics that come with world-class service.
Would you welcome improved visibility of your shipments?
If your answer is “yes” to having key knowledge about your shipments, we have the solution for you. It’s our Supply Chain At-A-Glance Report. Learn more about this and what it can do for you – and then request yours.