Why African ports' empty container pile-up crisis is deepening

Shipping lines are facing challenges and financial losses due to global trade imbalances, resulting in the accumulation of empty containers in import-heavy regions, including Africa.

The problem, which has also affected Kenya, is said to be complete, driven by economic, operational, and geopolitical factors.

Reports indicate that 60 per cent of the containers stuck at the port of Mombasa are empty, awaiting shipment to importing countries for reuse. However, there has been reluctance to ship them out due to cost implications.

Last month, Kenya Maritime Authority (KMA) Director General Omae Nyarandi urged shipping lines to deploy specialised ships or sweepers to ferry the empty containers to where they are required.

Kenya Ships Agents Association (KSAA) and Kenya Ports Authority (KPA) have been grappling with the accumulation of empty steel boxes as their shipment has been low compared to the arrival of imports.

One of the leading causes of empty container surplus in Kenya and Africa is the fundamental imbalance in trade, where many countries import more goods, mainly in containers from manufacturing hubs like Asia, than they export.

“The primary cause is the fundamental imbalance in trade, where many African nations import more goods (often in containers from manufacturing hubs like Asia) than they export,” said KSAA Chief Executive Elijah Mbaru, quoting various sources.

This happens when containers arrive with imports, but there is no equivalent volume of export cargo available for the return journey, leading to the empty boxes accumulating at the destination ports. Shipping lines often find it uneconomical to transport large numbers of empty containers on long-haul return trips to Asia or Europe, especially if those vessels could be used on more profitable, high-paying destinations such as the China-US routes.

Port congestion, customs clearance delays, and inadequate inland road and rail transport infrastructure also mean that containers take longer to be emptied and returned to depots, worsening the accumulation problem.

KSAA also noted that geopolitical happenings, such as recent disruptions and the rerouting of vessels around the Cape of Good Hope due to the Red Sea crisis, have exacerbated the problem by extending transit times and increasing congestion at South African ports, leading to a misplacement of containers globally.

Mbaru noted that shipping lines incur substantial costs for storing, handling, and eventually repositioning empty containers.

“These costs are often passed on to customers as Container Imbalance Charges (CIC) or empty container repositioning surcharges, which inflate overall freight rates,” he said.

Mbaru explained that the surplus of empty containers occupies valuable port and depot space, hindering the movement of laden containers and leading to further congestion and operational chaos.

The lack of available containers in export-oriented regions means shipping lines lose out on potential revenue from new cargo shipments.

Shipping lines argue that the unnecessary movement of empty containers contributes to increased fuel consumption and carbon emissions, which is a major environmental concern for the industry.

In response, shipping lines and the wider logistics industry are implementing several strategies to manage this problem.

Companies are increasingly using advanced technology and predictive analytics to forecast demand and optimise container allocation and distribution more efficiently.

They are also using online platforms and collaborative initiatives that allow shipping lines to share or exchange empty containers with other carriers or shippers, reducing the need for costly solo repositioning.

The liners are encouraging shippers (importers and exporters) to use their own containers (shipper-owned containers) to shift the responsibility for repositioning, which can be a viable option for certain trade lanes.

Shipping lines are also implementing demurrage and detention charges to encourage the timely return of empty containers by consignees.

Long-term solutions involve investment in port infrastructure and intermodal connections (rail, road) to improve port efficiency and reduce turnaround times, thereby streamlining the flow of containers.

According to Mbaru, shipping lines lose between $80 (Sh10,320) and $300 (Sh38,700) per day, depending on the region, when empty containers are not returned in terms of opportunity cost.

They also lose, depending on vessel size, $8,000 (Sh1 million) to $20000 (Sh2.6 million) on vessel operations costs when ships are idling and waiting to berth, this is besides the charter fees and other hidden costs.

“The container is part of the ship. Our rallying call is efficiency, that is, quick vessel turnaround and quick container turnaround. It’s as simple as that,” he noted.

Ships burn fuel even when anchored or slowly circling, increasing operational costs, says the website for Alg Global, a consulting firm focused on transportation, infrastructure and logistics.