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This year, under the severe impact of the epidemic, global trade has fallen into a slow state. After experiencing a sharp drop in shipping demand in the first half of the year, it has slowly recovered in recent months. This has also led to a strengthening of the shipping sector. The current shipping index has risen by 6.84%, ranking first in the market. Many companies such as COSCO Shipping Specialized, COSCO Shipping Holdings, and COSCO Shipping Development have hit their daily limit.
However, despite the booming demand for logistics, shipping capacity is declining, resulting in a sharp increase in container freight rates. Freight rates on the US West Coast route have increased by about 3 times compared to the beginning of the year, and freight rates on the South American route have also skyrocketed. Almost all routes have been affected.
As Europe and the United States gradually resume work and lift bans, port container shipping trade is gradually recovering. In addition, the inability of ports around the world to operate normally during the epidemic has led to a poor return of containers scattered around the world, resulting in a situation where it is difficult to find a container in China and there is nowhere to put containers in Europe and the United States .
Recently, the market has seen sky-high ocean freight rates of $10,000 . Industry insiders pointed out that the global shipping market will continue to be "hard to find a ship, hard to find a container", and mainstream shipping companies have already booked until late December, and it is predicted that high freight rates will continue until around the Spring Festival.
A sky-high freight fee of $10,000 appeared out of nowhere Recently, the freight rate from Yantian to Algeciras has reached 10,000 USD . A Maersk spokesperson said: "From July to October, all the containers that could be found have been rented out, but the leasing market has dried up and there are no empty containers on the market." Shanghai, Ningbo, Qingdao are still short of containers. Freight forwarders and shippers are experiencing high freight rates of 4,000 in South America, 5,000 in the East Coast of America, and 1,000 in Southeast Asia overnight, and there is no space or containers. This year's epidemic has brought different heavy blows to shipping companies, freight forwarders and foreign trade people . Maersk also spoke out on the 17th, saying that it would take a long time to restore normal transportation conditions in response to this phenomenon . Coupled with the arrival of the peak consumption season, it currently seems highly likely that shipping prices will remain at a high level for some time to come. After reading the shipping company’s notice, let’s highlight the key points! 1. The current situation of the shipping market is unlikely to ease significantly this year; 2. Container shortages, freight rate increases, shipping delays, and warehouse explosions are likely to continue.
Multiple factors push up freight rates As for the reasons for the recent boom in the container shipping market, industry insiders said it was the result of a combination of factors. On the one hand, due to the impact of the global epidemic, demand was suppressed in the first half of the year, and many businesses needed to replenish their inventory; on the other hand, a large number of epidemic prevention materials were exported, and the demand for home shopping in overseas markets increased .
In addition, the poor turnover of shipping containers has further pushed up freight rates. CIMC recently stated in an investor survey:
At present, our company's container orders have been scheduled until around the Spring Festival next year. The demand in the container market has increased significantly recently. The reasons are: first, due to the impact of the epidemic, the exported containers are scattered all over the world and the return is not smooth; second, foreign governments have introduced fiscal stimulus such as epidemic relief plans, which has led to a strong performance on the demand side (such as daily necessities and office supplies) in the short term, and the stay-at-home economy is booming. At present, it is judged that the "container shortage" situation will continue for at least a period of time, but the situation for the whole of next year is not clear.
According to data from the Container Trade Statistics Company (CTS), the growth rate of global container shipping trade volume remained flat in July 2020, and the volume accelerated in August and September, with the volume in September increasing by nearly 8% year-on-year. Judging from the year-on-year growth rate of the east-west trunk routes, the demand for the two major routes continued to expand, and the US route even expanded to a growth rate of more than 20%.
The research report pointed out that in the medium term, the inventory replenishment of the U.S. retail and wholesale industries has not yet ended, and the inventory cycle will last for at least half a year, laying the foundation for continued improvement in demand.
The conclusion of RCEP can significantly reduce tariffs and non-tariff trade barriers, further strengthen the Far East's position as a manufacturing center, and lay the foundation for the growth of regional seaborne trade volume . In addition, from the supply side, the proportion of shipbuilding backlog orders is at a historical low. Even considering the impact of new shipbuilding, the delivery deadline is after the second half of 2023, and there is no basis for large-scale deployment of shipping capacity. Industry insiders bluntly said, "It is still difficult to say that the shipping industry has fully recovered. Overall, the global epidemic is a negative factor for the shipping industry. The epidemic has changed the cargo shipping cycle, and the traditional seasonal characteristics of shipping are not so obvious." It's hard to find a box in China. Where did the boxes go? At this time, major ports such as Qingdao, Lianyungang, Ningbo and Shanghai are experiencing delays in ship berthing operations and pressure on ports due to an extreme shortage of containers. On the other side of the ocean, many ports in Europe and the United States are experiencing serious congestion due to a surge in containers. The main reason for this situation is that the epidemic has affected the normal global trade exchanges. It is expected that after the epidemic is brought under control, the situation of difficulty in finding a box in China will gradually disappear . According to data released by the National Bureau of Statistics, in the first 10 months of this year, my country's imports and exports grew by 1.1% year-on-year, better than the growth of global trade. Fu Linghui, spokesperson of the National Bureau of Statistics, said that this fully reflects that China's foreign trade has great potential and strong resilience. It is understood that due to the paralysis of production capacity in many countries, China, which was the first to get rid of the impact of the epidemic and put production back on track, has become the center of the world's factory in a short period of time. Orders from Southeast Asian countries such as Bangladesh, Vietnam, and India have been transferred to China, and as a result, the number of goods shipped from China has increased sharply . Data shows that since July, my country's container exports have grown rapidly, and after entering October, the container throughput has further accelerated. Data released by the China Port Association shows that the container business of key monitored coastal ports has further accelerated. In October, the container throughput of the eight major hub ports increased by 11.1% year-on-year, a record high this year. However, if we look at the international market, it is not difficult to find that the global market is seriously uneven . The American Trucking Association (HTA) said that at the ports of Los Angeles and Long Beach alone, 10,000 to 15,000 containers were stranded at the docks, causing "near complete paralysis" of cargo transportation at the ports of Los Angeles and Long Beach; West Coast ports and Chicago were also at a loss as to what to do with the large number of empty containers brought about by the surge in imports. Not only in the United States, but also in Australia and the United Kingdom, the backlog of empty containers is becoming increasingly serious. It is estimated that the number of empty containers in Australia alone exceeds 50,000. There are relatively large numbers of ships coming out of China, but fewer ships coming out of Europe and the United States. Against this background, China ships out shiploads of containers, but only a few return, causing a large accumulation of containers in Europe and the United States, while it is difficult to find a container in China . Orders surged, trade volume far exceeded expectations The containers go out but never come back, causing a lot of trouble for each country. It is understood that due to the escalation of the epidemic in Europe and the United States, there is a shortage of workers, vehicles and racks at ports, and the ship punctuality rate has dropped from 85-90% in June to 56% in September. The average ship schedule is delayed by five days, and the punctuality rate continues to decline. According to statistics, the waiting time at ports on the west coast of the United States is 4-5 days, and the waiting time at Auckland, New Zealand is more than 10 days. Festos in the UK has announced that it will stop accepting empty containers due to overcrowding. At the same time, the free storage period commonly seen in foreign ports has also become much shorter than before. The free storage period of two weeks or more no longer exists, and many ports have directly collected rent. In China, due to the shortage of containers at many ports, some shipping companies began to significantly increase freight rates and started charging various surcharges. However, this did not have a significant impact on China's cargo volume . At present, China's import and export trade has accelerated for four consecutive months. According to the data from the General Administration of Customs, China's import and export volume has shown a deep "V" trend since the beginning of the year. Affected by the outbreak of the epidemic from March to May, international trade was weak and the import and export volume continued to decline. Since June this year, with the control of the epidemic and the resumption of work and production, the import and export volume has improved significantly. For the first time in two years, it has grown for four consecutive months, and there is an accelerating growth trend . The container throughput and import and export value trends are highly consistent, reaching 24.53 million TEUs in September, up 7.63% year-on-year. It also marked four consecutive months of positive growth from June to September, with an obvious bottom rebound trend.
P.S. This article is compiled by the Foreign Trade Rescue Center and Foreign Shipping. Please be sure to indicate the source when reprinting.
(Source: FBA Information)
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