Grabbing of China's export container shipping market
"Grabbing" seems to be the theme of China's export container shipping market in the second half of this year.
“It’s not busy but chaos to grab space, boxes, and prices. Now it’s not busy but chaos.” Zeng Liying, general manager of Shanghai Ao Pai International Freight Forwarding Co., Ltd., said recently that the current domestic export container freight rates fluctuate even by hour. , "Previously, the quotation was based on a weekly basis. Now the liner company has just quoted, and it may call to notify the price increase in an hour."
Why is it so popular? Han Ning, director of Dululi China, believes that on the one hand, transportation demand has soared, and on the other hand, container turnover caused by the epidemic has slowed down. This hot market is expected to continue after the Spring Festival next year.
The latest news is that the world's largest container shipping company Maersk released its third-quarter 2020 financial report on the 18th, showing that due to the rebound in demand, the increase in freight rates and the reduction in costs, the profit increased by 39% to 2.3 billion US dollars during the period.
(Subheading) Grabbing space: Capacity regulation triggers general price increase
Shanghai Shipping Exchange's Shanghai Export Container Freight Index on the 13th was 1857.33 points, an increase of more than 1,000 points from 855.34 points in mid-April this year!
The freight rates of the US East (basic port) and US West (basic port) continue to remain high. The market freight rates (including ocean freight and ocean freight surcharges) are 3887 USD/FEU (that is, a 40-foot container) and 4676 USD/ FEU, a new historical record. In the first half of this year, the average freight rates of these two routes were only US$1,749/FEU and US$2813/FEU, less than half a year, and the increase reached 122.24% and 66.23% respectively.
Compared with the previous situation where the freight rates of the West America and East America routes led the rise, the freight indices of many routes now show a general upward trend.
The freight index of West Africa (Lagos) routes increased the most, with an increase of 346 points from last week to 3978 points; the Southeast Asia (Singapore) route increased the most, rising 53.26% to 728 points from 475 points last week. In addition, the freight index of European (basic port), Mediterranean (basic port), Australia and New Zealand (Melbourne), South America (Santos) and other routes rose by more than 100 points.
In this regard, Han Ning believes that the most direct reason for the general increase in freight rates is that the liner company’s capacity adjustments have allowed high freight rates to spread from the US to other routes. "The capacity, especially the number of boxes, is certain. When the freight rate of a certain route is particularly high, the liner company will definitely spare no effort to arrange resources on the most profitable route, breaking the balance of supply and demand on other routes, and the capacity and boxes will appear. Shortage, and considering the recovery of transportation demand in Northern Europe in the third quarter and the high growth rate in Southeast Asia, freight rates will definitely be driven."
"The liner company transferred 5,000 to 8,000 boxes of ships that originally ran Southeast Asia to the East and West of the United States, and used small boats to run Southeast Asia. The space suddenly became tight and the price increased." Zeng Liying said with emotion, "Now Southeast Asia ( Route) to more than $2,000, which is too ridiculous."
In fact, the high-volume and high-priced US East and West US routes have indeed made liner companies taste the sweetness.
Take COSCO SHIPPING Holdings as an example. In the third quarter, the east and west trans-Pacific routes brought the company 13.512 billion yuan in revenue, a year-on-year increase of nearly 20%, while the year-on-year growth rate of freight volume was 9.18% in the same period. The same frequency resonance of freight rate and volume has greatly improved the company's profitability, which has increased from 137 million yuan in the semi-annual report to 3.86 billion yuan in the third quarterly report. The year-on-year growth rate has not only changed from negative to positive, but also achieved a growth of over 80%.
The US East and West US routes have become genuine "golden routes", and liner companies are constantly increasing their capacity. "The current capacity should have increased compared to the same period." An industry insider said.
(Subheading) Box grabbing: strong exports lead to empty boxes returning
The underlying reason for the regulation of transportation capacity is that my country's foreign trade exports are showing a growth trend.
Customs statistics show that my country’s total imports and exports of goods in October totaled 2.84 trillion yuan, an increase of 4.6% year-on-year, achieving five consecutive months of positive growth since June, of which exports were 1.62 trillion yuan, an increase of 7.6%. According to Han Ning, since August, the monthly traffic volume of the Western US Route has increased by more than 20% year-on-year, and the freight volume in the entire third quarter has increased by about 16% year-on-year.
The third quarter report of COSCO SHIPPING Holdings showed that the company's dual-brand (COSCO SHIPPING and OOCL) fleet completed 7,08818,000 TEUs in the third quarter, a year-on-year increase of 6.6% and a month-on-month increase of 13.5%.
After entering November, the strong momentum of my country's foreign trade exports has become more apparent.
According to the monitoring data of the China Ports Association, in early November, the container throughput of the eight major hub ports including Shanghai and Ningbo increased by 13.1% year-on-year, an increase of 6 percentage points from the previous period; the foreign trade container throughput increased by 11.5% year-on-year, significantly higher than the previous period. From a regional perspective, the foreign trade business in the Yangtze River Delta and the Pearl River Delta is growing strongly, and the growth rate of Ningbo Zhoushan Port even reached 33%.
Many of these are orders transferred to China due to the impact of the epidemic abroad.
The person in charge of the foreign trade business of a listed company in the textile and apparel industry in Jiangsu said: "Except for Vietnam, Southeast Asia (the textile industry) is affected by the epidemic, so the export orders for home textiles such as towels and bed sheets have increased this year." However, the person in charge also Frankly, due to the impact of the second epidemic, European and American customers are holding a wait-and-see attitude towards the purchase of ready-made garments next year, and the situation of foreign trade orders has not improved.
In Han Ning’s view, with the continued vigorous exports for several months and the slowdown in container turnover in importing countries due to the impact of the epidemic, more and more containers are "precipitating" in the process of transportation and turnover, and the supply and demand of containers are seriously out of balance. "A box is hard to find" is inevitable.
Under normal circumstances, liner companies adopt dynamic management of container supply, that is, in addition to maintaining a certain inventory through their own or lease, they will also incorporate factors such as deployment and repair into the supply plan. Industry data shows that the global container capacity scale is 24 million TEUs and the container equipment scale is 44 million TEUs. The ratio of the two is about 1:1.8, which can maintain the supply in the normalized market.
However, this year’s container shipping market went from a shortage of goods at the beginning of the year, to a shortage of space in the middle of the year, and then to a shortage of boxes today. The ups and downs of the market have made liner companies unable to deal with conventional operations and unconventional strategies such as empty container return. Came into being.
(Subheading) Looking at the market outlook: the contradiction between supply and demand is difficult to alleviate in the short term
Judging from the current market information, there is still pressure for further increases in container shipping prices.
On the one hand, in order to regulate empty container resources, various surcharges have been put on the agenda by liner companies. CMA CMA CGM announced that starting from the 15th of this month, it will impose a peak season surcharge on all cargo exported from Asia to the Mediterranean and North Africa. The levy standard is 300 USD/TEU, 600 USD/FEU; 40 feet high from Asia to Africa Boxes, a surcharge of US$200 will be levied for each box. In view of serious port congestion, Mediterranean Shipping announced that it will impose a congestion surcharge of US$175/TEU on all types of container cargo exported from the Far East to the United Kingdom from December 1. Prior to this, many liner companies have imposed surcharges.
On the other hand, in the second half of the year, photovoltaic and other industries concentrated on exports and delivered to overseas users, which intensified competition on the demand side.
“Recently, there are a large number of photovoltaics waiting to be exported. There are dozens of boxes each time. The space and boxes are even more difficult to grab.” Zeng Liying said, “Although there are many photovoltaic boxes, they must now be sold at market prices without any preferential treatment. , Because everyone is rushing away." Wang Bohua, vice chairman and secretary-general of the China Photovoltaic Industry Association, said recently that the export volume of photovoltaic modules in the first three quarters of this year has exceeded 52.3GW in the same period last year. In addition, it was learned from a listed company in the photovoltaic industry that the export volume of the entire photovoltaic industry increased in the second half of the year. “There is indeed a queue phenomenon in module cabinets”.
At the same time, although domestic box-making enterprises are expanding production and catching up, in the eyes of industry insiders, the status quo of "a box is hard to find" is still difficult to change in a short time.
An executive of Textainer, the world's largest container leasing company, said: "The output of containers cannot meet the sudden increase in demand. The monthly output of China's container manufacturers is up to about 300,000 TEU, and the factory is running at full speed."
How busy are China's container manufacturers?
"The factory is now busy with a record. In the first half of the year, we were still worried that the boxes in the factory could not be stacked, and now the trucks shipped are not enough." said a business executive of Taicang CIMC Container Manufacturing Co., Ltd. Taicang CIMC . It is understood that the current production capacity of Taicang CIMC has been equivalent to the previous “24-hour two-shift system”. “If you are too busy, you will keep getting people and equipment on the floor.”
"The internal news is that orders after the Spring Festival next year are already available, and we are discussing the holiday shift plan." When asked whether the production plan is only applicable to Taicang CIMC, the supervisor made it clear that this is a common phenomenon in the industry. , "In the current environment, there must be (orders), and everyone has them."
However, for freight forwarders, the six to eight-week manufacturing and transportation cycle of new containers is difficult to alleviate the current market for "grabbing" boxes.
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