In the second half of last year, the rapid recovery of the shipping market caused the “hard to find one container” situation to continue after the beginning of this year-empty containers are still in demand, and some people can't order containers with 10,000 US dollars. On January 8th, at the Hudong Wharf of Waigaoqiao, Shanghai Port, the terminal production has been operating at full capacity recently. In the yard, there are a large number of containers stacked, and the number of heavy containers for storing goods is much larger than the number of empty containers. The industry believes that the shortage of empty containers and the hard-to-find situation of one container will continue for some time.
Where are the empty boxes that you can't get?
Chinese shippers and freight forwarders all over the world "seeking" empty containers, but where did the empty containers go? The answer is simple, it is blocked in other ports.
While the Asian port and shipping industry is desperately desperate for empty containers, although there is a shortage of shipping capacity, price increases can be used to push shipping companies to cancel suspending, refilling, and increase shipping capacity; however, a large number of containers full of cargo are seriously stranded in European and American ports and warehouses. , Unable to move.
A British freight forwarder said, "Our customers are willing to pay such a high freight, but due to port congestion, we are still working hard to move the boxes. Some boxes have been on the dock for more than four weeks and still don’t know what Time to ship."
At the same time, urgently needed empty containers in Asia are scattered in warehouses across Europe, especially in the United Kingdom, where troubled ports have to restrict container delivery to already overcrowded terminals.
The current shortage of containers is a once-in-a-hundred-year problem in the history of global supply chains, and there is basically no solution in the short term. In recent weeks, some container ships sailed from Asia to Europe, but did not return in time, resulting in a serious shortage of empty containers.
A carrier source said: “Due to the insufficient number of containers in the warehouses in China, we have had to reduce the number of recent voyages.” All carriers report that their warehouses are severely lacking the most popular 40-foot tall containers and 40 Foot standard containers, most of the time, even 20 foot containers are in short supply.
The latest container availability index report from Container xChange shows that the availability of the entire China is "still at the lowest level in history." The report added: “Due to the rapid growth in demand after a few months of blank sailing, the current availability rate of 40-foot high cabinets in China is only 0.05 points, compared with 0.63 in the same period last year.” Data above 0.5 indicates surplus, and below 0.5 indicates deficit.
A British freight forwarder revealed that many ocean carriers (shipping companies) now refuse to accept their export bookings until mid-January. "Our customers are ready to pay for these crazy prices, but the ports are blocked. We are still trying to pull the boxes away. He said: “We have some boxes on the dock for more than four weeks, but we still don’t know when they can be unloaded. "
At the same time, urgently needed containers in Asia are scattered in warehouses across Europe, especially in the UK. In the UK, congested ports began to order to restrict containers from being shipped back to already overcrowded terminals.
“The epidemic situation in Europe and the United States still exists, and the labor force in the ports is definitely relatively short, and the speed of customs clearance will slow down. This will prevent the timely unloading of incoming goods and allow the containers that could be turned around to stay abroad for a long time." Yang Li, a retired freight forwarder, analyzed. In addition, since the third quarter, China's export business has increased in volume, which has also intensified the pressure on container demand.
Global container ship freight rates soared by 80%
The lack of containers in the market has led to soaring shipping rates, and the price increase of popular routes is even more exaggerated. Guo Shaohai, head of the International Freight Forwarding Company, said that the freight rate on the same route has doubled in the past six months. For foreign trade companies, production cannot be stopped. It is difficult to ship a large amount of goods with orders, and there is great financial pressure. The industry expects that the shortage of containers and space will continue.
Guo Shaohai said that on May 18, 2020, the sea freight from Shanghai to Long Beach on the West Coast of the United States was US$1,550 for a 40-foot container at that time. It was US$4,500 on January 7 this year.
Yan Xianjie, the sales manager of an international cargo company in Shanghai, said that the price of small cabinets will rise to more than US$4,000 per cabinet in the US West, and the US East small cabinets may have to rise to US$6,000 or 7,000, and there may be no space before the new year. . Prices in Europe continue to increase, and large cabinets may rise to US$9,800, and many customers do not have a cabinet for US$10,000.
The comprehensive index of China's export container freight rate is a "barometer" of price changes in the container transportation market. The latest data from the Shanghai Shipping Exchange show that on January 8, the comprehensive index of China's export container freight rate reported 1,753.85 points, a record high again. The average in May 2020 is only 837.74 points.
"Lianhe Zaobao" reported on January 8 that the COVID-19 pandemic has caused global port congestion and “unavailable containers”, which in turn pushed up ship freight rates soaring by about 80% within two months. The current increase has not faded.
According to the global container freight rate of Drewry, a shipping consulting company, the freight rate per TEU at the end of last year was US$4,359 (approximately S$5752), which is an increase of 75% from the level of approximately US$2500 in October last year. %.
Prior to this, a container shipping company pointed out that the current European route and Mediterranean route freight rates have reached a record high. Although the European route rises later than the US route, the rise is much faster than the US route. On December 11, the freight rate of the western US route was flat at 3948 US dollars/FEU, and the US eastern route was 4804 US dollars/FEU, which increased slightly by 2.2%, which was also approaching a historical high.
Since the fourth quarter of last year, the freight rate of the Far East to Europe route has soared rapidly. In the past two and a half months, it has risen by 152.39%, which is almost three times the difference from the low of US$725 in late April this year. Since September, the freight rate of the Far East to Europe route has exceeded 1,000 US dollars. Due to the difficulty of finding a container in the container shipping market, the rapid increase in the volume of Asian exports to Europe, and the congestion of British ports, the European line freight rate has begun to surge and is expected to exceed 3,000 US dollars this week. .
How to solve the problem of missing boxes
The shortage of containers and the sharp increase in freight rates have attracted the attention of market management departments. China's container production and sales account for 96% of the global market, and it has formed an industrial cluster with full product lines, full supply chains, and full technical capabilities. In this regard, Gao Feng, spokesperson of the Ministry of Commerce, stated at a press conference on December 3, 2020 that he will work with relevant departments to promote increased capacity allocation, support accelerated container return transportation, improve operational efficiency, and support container manufacturers to expand production capacity. . At the same time, it will increase the intensity of market supervision, strive to stabilize market prices, and provide logistics support for the steady development of foreign trade.
After experiencing industry losses in 2019 and a shortage of orders in the first half of 2020, container manufacturers have finally ushered in their own busy moments. According to a source from a large domestic container manufacturer, factory employees now have to trot to go to the toilet and eat lunch for only ten minutes, just to speed up the production progress. "We haven't encountered such a good market in many years. The whole industry is stepping up the production of new boxes, and orders have been scheduled until March next year." He said.
Qingdao CIMC Reefer Container Manufacturing Co., Ltd., located in the Shanghe Demonstration Zone in Jiaozhou, is rushing to make container orders in the workshop. "Starting from the third quarter of 2020, we have been running at full capacity to ensure growth and stable production." The relevant person in charge said that the company will gradually resume orders from the third quarter and make every effort to increase production and ensure supply. This trend is expected to continue until 2021 The first quarter.
However, people in the shipping industry predicted that the shortage of containers will continue until the first quarter of 2021. Therefore, there are already large domestic container companies that dare not rush to take orders for the second quarter of 2021.
Now that the market is in short supply, it is completely possible to launch capacity projects, purchase equipment, and let workers work overtime to produce, but in the long run, this will break the balance of supply and demand in the global container market.
At present, the service life of containers is 10 to 15 years. After the rapid one-time release of production capacity, what about next year or the next year? The development of the industrial chain still requires a long stream of water. Therefore, while moderately increasing production capacity, it is also necessary to work hard on container inventory.
For example, major shipping companies are currently stepping up to empty containers from Europe and the United States. In order to ship European and American empty containers back to Asia as soon as possible, some shipping companies in the European and American markets have tried not to take back the cargo, especially the goods exported from the US inland to Asia. If the US grain is exported in the peak season, the container will cost about in and out of the inland. Two weeks, and the grain is heavy cargo, which affects the loading of ships. In October 2020, the German Hapag-Lloyd shipping company (Hapag-Lloyd) publicly announced that it would suspend the shipping of US soybeans and other US agricultural products in containers.
Industry insiders also pointed out that alleviating the pain of the shortage of shipping containers must tap the potential and expand the capacity of the entire industry chain.
On the one hand, the inventory capacity encourages and supports domestic shipping companies to restore their capacity to the pre-epidemic level as quickly as possible. At the same time, they increase the supply of containers by opening overtime ships, deploying ships from other routes, and seeking charters from the market. Domestic shipping and logistics companies should actively coordinate overseas partners and overseas companies to improve the efficiency of international container turnover. Freight forwarders and shipping companies should actively communicate with them, and do a good job in peak-shift transportation planning and scientific management of space.
Not only that, it is necessary to seek a close connection between railway containers and shipping, allowing containers to circulate between continents, thereby reducing the cost of container use. At the policy level, it is possible to increase subsidies for shipping and land transportation companies for container return, and to issue port exchange coupons and merchant special coupons to export companies to help them reduce their freight burden.
In addition, commerce departments and customs should strengthen the supervision and supervision of shipping companies' freight rates, and conduct timely interviews and financial penalties for improper behaviors such as sudden price increases and arbitrarily asking prices.
