/ By TJ China Freight / Shipping

Orders have skyrocketed, but profits have fallen instead of rising? High freight costs torment Chinese exporters!

When the overseas epidemic has not been effectively controlled, telecommuting and home isolation have become the norm. The suspension of offline transactions in the past has accelerated the shift of international trade to online. In this context, China's foreign trade exports have accelerated recovery, especially the rapid increase in cross-border e-commerce orders.

Recently, the "home economy" related products represented by furniture, home appliances, toys, and daily necessities have continued to explode. China’s small commodity export orders have surged, and many manufacturers’ orders have already been scheduled to 2021.

Correspondingly, due to the imbalance of China's import and export trade, container shipping export freight rates remain high, and containers are "difficult to find". These problems have become more prominent under the stimulation of huge transportation demand.

The explosive growth of export orders and thorny transportation problems have put Chinese exporters facing tremendous pressure and challenges.

Export orders soared, shipping costs soared

"This time of the year is the peak season. In previous years, the factory was very busy and the number of offline purchases was countless. This year, affected by the epidemic, almost all of them have adopted online ordering." Wan Rufang, general manager of Zhejiang Fengfan Stainless Steel Products Co., Ltd., told China A reporter from Aviation Weekly said.

Ju Jianshuang, general manager of Shanghai Jiesheng Furniture Co., Ltd. also introduced: "Compared with last year, this year our company's export orders have increased by about 10%."

But the headache for these exporters is that although the volume of export orders has exploded, their profits have not risen but fallen. The main reason is that the increase in shipping costs is even more alarming.

At the beginning of this year, the outbreak of the new crown pneumonia epidemic caused most Chinese companies to stop work and production, leading to the cancellation of many orders and a decline in freight volume. Shipping companies have also adopted measures such as reducing capacity and reducing voyage density in response to market changes. However, shortly afterwards, the epidemic in China was effectively controlled, and companies gradually resumed work and production, exports basically recovered, and freight volumes rebounded rapidly.

However, judging from the market reaction, the shipping company's capacity increase did not match the cargo volume, which caused the freight rate to rise all the way. The direct reason for the recent sharp increase in freight rates is that the overseas epidemic has affected the efficiency of port loading and unloading. At the same time, the logistics turnover is not smooth, the shortage of containers is very prominent, and the supply and demand are seriously mismatched. For this reason, shipping companies have begun to levy congestion surcharges, peak season surcharges, and lack of containers surcharges.

 

Orders have skyrocketed, but profits have fallen instead of rising? High freight costs torment Chinese exporters!
Latest SCFI data

According to the Shanghai Export Container Freight Index (SCFI) released by the Shanghai Shipping Exchange, on December 18, the market price of Shanghai’s exports to European basic ports (including maritime surcharges) was US$3,124/TEU, an increase of 6.0% from a week ago. Compared with the US$1,508/TEU a month ago, it has doubled.

The price of US$3,124/TEU on the Asia-Europe route is the highest ever since SCFI was released in 2009.

During the same period, the market prices (including shipping surcharges) for exports from Shanghai to basic ports in the West and East of the United States were 3,900 US dollars/FEU and 4874 US dollars/FEU, which were also at historical highs.

Cai Jiaxiang, vice chairman of the China Association of Foreign Trade and Economic Cooperation Enterprises, said bluntly: "Sometimes, the sum of various surcharges even exceeds the freight."

Exporters' profit shrinking affects foreign trade stability in the long term

It is understood that about 80% to 90% of foreign trade export enterprises in China sign the FOB clause in the export contract, that is, the buyer pays for the freight.

Cai Jiaxiang analyzed: "In a short period of time, because Chinese exporters who sign FOB clauses will pay the freight by the buyer, it will not be greatly affected in the early stage of the price increase. But from a long-term perspective, if the freight continues to rise, the export The business is bound to be affected to a certain extent."

 

Orders have skyrocketed, but profits have fallen instead of rising? High freight costs torment Chinese exporters!

 

 

He took the US importer as an example. If the buyer needs to pay up to 5,000 US dollars in freight per box for a long time, the buyer's import cost will be greatly increased, and the Chinese exporters may be required to share the high freight.

Even if the Chinese exporters who sign the FOB clause do not need to bear the ocean freight, they still have to pay for the transportation costs of the goods from the factory to the dock. At present, affected by the lack of containers, exporters can only obtain empty containers by waiting for empty containers or raising the price. In order to ensure shipments, most exporters will choose to increase the price to pick up the box, which also increases the export cost of Chinese exporters.

More importantly, the continued high freight rates will also affect the purchasing power of overseas consumers. Due to the increase in costs and the substitutability of some commodities, importers may consider whether to use substitutes when choosing commodities.

Wan Rufang said: “Our company’s order volume from August to October was relatively large. Compared with March to June, it has doubled. But starting from November, some countries have adopted closed measures and freight Excessively high, to a large extent affect the customer's purchase volume."

On the other hand, the Chinese exporters who signed the CIF clauses, as they directly bear the export freight, have a deeper understanding of the pain points of high freight, and it has effectively affected their own profits.

Ju Jianshuang's company faced this situation. He reluctantly said: "Our company is mainly based on signing CIF contract terms. In most cases, the ocean freight of exported goods is borne by us. The recent rapid increase in freight has caused the company's costs to rise sharply, and the monthly profit is about reduced. 600,000 yuan."

Ju Jianshuang said that the high freight rates are too burdensome for companies that "small profits but quicker sales" and mainly out-of-stock volume. "We will consider negotiating with customers to postpone shipments or raise prices appropriately. But the main solution is to give up some profits by the company itself to maintain normal operations."

He believes that a balance should be maintained between production companies and transportation companies to ensure the living space of both parties.

 

Orders have skyrocketed, but profits have fallen instead of rising? High freight costs torment Chinese exporters!

 

 

However, even in the current era of "hard to find a box" and frequent freight charges, seaborne export is still the first choice for Chinese exporters.

There are two main reasons for this. One is the export destinations of some exporters, such as the United States, Canada, Malaysia, Singapore and other countries. These destinations cannot deliver goods by means of transportation other than sea or air, and air transportation has certain transportation restrictions and the freight rate is too high. , Most exporters will not consider; second, although shipping costs have risen sharply, they are still lower than road, rail, air and other transportation methods. At the same time, shipping has greater advantages in capacity and can better meet the needs of Chinese exporters.

Cai Jiaxiang further explained: "In the early days, shipping goods to Europe via the China-Europe Express train cost about US$10,000 per TEU. At present, although the freight rate of the China-Europe Express train has been lowered to US$7,000-8,000 per TEU, the price is still higher than that of ocean freight. From the perspective of many Chinese exporters, price is more important than speed."

Chinese and U.S. regulators frequently call for exporters to restore capacity

In response to the current difficulties faced by Chinese exporters, the Ministry of Commerce of China has paid close attention and responded publicly.

Gao Feng, spokesperson of the Ministry of Commerce, said at a recent press conference that many countries around the world are facing similar problems in foreign trade logistics due to the impact of the new crown pneumonia epidemic. The mismatch between supply and demand of capacity is the direct cause of the increase in freight rates. Factors such as poor container turnover have indirectly pushed up shipping costs and reduced logistics efficiency.

 

Orders have skyrocketed, but profits have fallen instead of rising? High freight costs torment Chinese exporters!
Gao Feng, spokesperson of the Ministry of Commerce

He further emphasized: "The Ministry of Commerce will work with relevant departments to increase capacity allocation, support accelerated container return transportation, improve operational efficiency, and support container manufacturing enterprises to expand production capacity. At the same time, it will increase market supervision and strive to stabilize market prices. Provide strong logistics support for the stable development of foreign trade."

Prior to this, the regulatory authorities of China, the United States and other countries have also stated that they will pay close attention to issues such as rising freight rates in the shipping market.

In September of this year, the Ministry of Transport of the People’s Republic of China interviewed all shipping companies operating China-US liner routes, emphasizing that it will strengthen the supervision of China-US routes, requiring that the capacity, routes and schedules must be filed, and freight and all surcharges must be regulated. reasonable.

 

Orders have skyrocketed, but profits have fallen instead of rising? High freight costs torment Chinese exporters!

 

 

Also in September, the US Federal Maritime Commission (FMC) also issued a warning to shipping companies that it would crack down on potential violations of competition laws. Soon after, FMC also announced the toughest measures to increase the supervision of the three major shipping alliances in response to issues such as freight and demurrage. It is required that shipping alliances must submit specific trade data to FMC every month, whereas previously it was only required to submit every quarter.

In this regard, Cai Jiaxiang said that the European and American regulatory policies are relatively timely. The EU has the most stringent anti-monopoly issues, and the United States is not inferior. These areas have achieved certain results in freight control, and prices are relatively stable.

Regarding the domestic export trade market, Cai Jiaxiang believes that “restoring the original normal capacity and flight density is the top priority to solve the problem.”

He further stated that the voice of the Ministry of Commerce can improve the current market conditions to a certain extent, but it still needs to increase efforts. "Call on the Ministry of Transport to interview shipping companies to restore normal capacity and flight density, and the State Administration for Market Supervision and Administration will use anti-monopoly laws reasonably and adopt legal weapons to cut the root cause of shipping problems." Cai Jiaxiang said.

/ By TJ China Freight / Shipping

Had it not been for the blocking of US ports, China’s November trade surplus could have exceeded 75.4 billion US dollars

In recent months, the number of ships going to the Port of Los Angeles and Long Beach has almost doubled, and the nearby seas have been heavily congested, causing extensive delays in routes north of the United States and even affecting the throughput of the Port of Oakland. The Marine Exchange of Southern California in Los Angeles confirmed the incident. According to statistics, 52 container ships entered and exited the San Pedro Bay port on Monday alone, and the daily average for the year was 24 ships, even more exaggerated is that the number of berthed ships reached 23 ships, and the daily average is only one.

 

The rapid increase in the number of trans-Pacific freighters has boosted the throughput data of California container ports. According to statistics, the container throughput of the Port of Los Angeles and Long Beach in November showed double-digit growth-the container throughput of the Port of Los Angeles in November Soared to 889,746 TEU, an increase of 22% over the same period last year. Officials from the local port and shipping authority stated that there has been an unprecedented surge in freight volume under the influence of factors such as the increase in consumers at the end of the year, the approaching holidays such as Christmas and New Year, and the inventory of various units.

The gap between imports and exports across the United States has widened again, and the rate of empty containers in ports has skyrocketed

 

Had it not been for the blocking of US ports, China’s November trade surplus could have exceeded 75.4 billion US dollars

 

 

Gene Seroka, Executive Director of the Port of Los Angeles, said at a news conference on Wednesday, “After nearly 11 months of year-on-year decline in freight volume, we have now ushered in 4 consecutive months of year-on-year growth. In the past month, our monthly average throughput reached 930,000 TEUs. But related to this, our export volume was affected by many factors-mainly due to the continuing trade tensions with China and the continued appreciation of the U.S. dollar. The volume dropped by 5.5% compared to the same period last year, and it was down nearly 15% for the whole year. Fully loaded containers were even shipped back to Asia empty after being unloaded at our port. This month, the number of empty containers was as high as 294,000 TEUs. This was an increase of nearly 35% in the same period last year."

 

The Port of Long Beach also stated in a press release that November was the best November on record, and that this was the result of the holiday retail boom and the surge in delivery of medical protective equipment-the Port of Long Beach in November The container throughput was 783,523 TEUs, an increase of 30.6% over the same period last year. The situation at the Port of Long Beach is entirely related to the surge in imports. Imports increased by 30.5%, soaring to 382,677 TEUs; but exports fell 5.2% to 117,283 TEUs-like the Port of Los Angeles, the empty container rate increased by 55% to 283,563 TEUs Standard box.

Mario Cordero, Executive Director of the Port of Long Beach, said: "As consumers choose to live at home this year, online shopping and purchases of medical protective equipment have gradually increased. However, as a new round of new crown pneumonia epidemic is still spreading across the country, The overall economic outlook is uncertain."

 

This is the highest port import volume that U.S. ports have encountered in the past decade

Some analysts believe that due to the restrictions of the new crown pneumonia epidemic, consumers are unable to spend money on services and start to spend money on goods, resulting in this unexpected growth, and the new crown epidemic has also contributed to the prosperity of container ports (at least Is temporary).

 

Excessive accumulation of goods has become a problem that more and more container ports are facing. MarineTraffic AIS (Ship Positioning) data shows that an average of more than 20 container ships are waiting in Los Angeles and San Pedro Bay in Long Beach every day. This is the same as the number of ships at anchorage last week.

 

Had it not been for the blocking of US ports, China’s November trade surplus could have exceeded 75.4 billion US dollars

 

 

Source: Marine Traffic

John McCown, the founder of Blue Alpha Capital, said that this seemed unimaginable when the new crown epidemic began. He added: "Considering the possible increase in December 2020, the annual increase will be around 1.5%, which will reverse the slight decline of 0.9% in 2019.

 

McCown pointed out that there were several industries where imports surged in November. Imports of furniture, sporting goods and toys increased by 55%. In October and September, they increased by 52% and 41%, respectively. "The lifestyle at home has driven the sales of a range of consumer products." He added that the surge in demand is partly due to consumers' redistribution of spending that is usually used for vacations, dining out and entertainment.

 

According to data from Blue Alpha Capital, despite the positive import data, US exports in November fell by 4.2%, the ninth consecutive month of decline, further exacerbating trade imbalances, and the import load ratio of each export reached 2.32, which is close to the historical record. .

McCown said: "The latest data seems to confirm that the impact of the trade war on our container exports is greater than the impact on our container imports."

 

Facing the soaring imports from the west coast, the port of Auckland in the north is not so lucky

 

Had it not been for the blocking of US ports, China’s November trade surplus could have exceeded 75.4 billion US dollars

 

 

Unlike the Ports of Long Beach and Los Angeles on the west coast, the Port of Oakland in the north increased its throughput by less than 1% year-on-year in November and its export volume fell by 2.6%. In November, the total imported container volume was 78,045 TEUs.

 

Officials at the Port of Oakland said that despite the strong import demand from the United States, the import volume of our port is far from reaching the expected value. The official quoted reports from local maritime experts as saying that it is precisely because of large batches of imported goods across the United States that disrupted the normal freight arrangements at ports, causing large-scale delays in the delivery of goods at many ports. What needs to be pointed out is that the increased accumulation of imported cargo in Southern California ports has caused ship delays, and many ships originally scheduled to call at the Port of Oakland have been forced to change their routes or directly cancel their call arrangements.

 

The director of the Port of Oakland, Bryan Brandes, declared that everyone does not need to be so pessimistic. “The cargo that should come to our port will still come, at most a while later (Thecargo is there, it's just delayed).” He expects to wait until December for a certain amount of cargo. Will grow.

 

However, Brandes also acknowledged that the increase in the number of incoming ships on the west coast has had a butterfly effect on the Port of Oakland. "Most of the cargo east of the trans-Pacific route is the Los Angeles route directly, and then some of it will go north to and from the Port of Oakland. So once the Port of Los Angeles produces Because of the delay, we will have a little impact here more or less."

 

U.S. agricultural exports have been affected by the chain, and this new year may not have been easy

 

Had it not been for the blocking of US ports, China’s November trade surplus could have exceeded 75.4 billion US dollars

 

 

The Port of Oakland is an export gateway favored by agricultural producers in central California, and it is now being hit by disruptions in the supply chain. As the Spring Festival approaches, exporters of agricultural products in many places, including California, said that due to shipping delays, their export business has been affected on a large scale-especially almond and walnut exporters, whose export peaks are at the end of each year.

 

Ed DeNike, President of SSA Terminals, said: "The biggest problem is due to traffic congestion in Southern California. Freight ships have not left Southern California. The arrival of the ships at the Port of Oakland may be delayed for at least one week."

 

Peter Schneider, vice president of freight company TGS Logistics, said that the butterfly effect of port congestion on the inland supply chain is getting worse. TGS now has to double the capacity of their container warehouse in Auckland. Because of the delay in the arrival of the ship, the shipping company will either refuse to accept all the exported goods or change the date of receiving the exported goods. This has caused exporters’ services to overseas buyers. Had a great impact.

 

my country's port containers are "difficult to find"

 

Had it not been for the blocking of US ports, China’s November trade surplus could have exceeded 75.4 billion US dollars

 

 

On the one hand, U.S. agricultural product exporters were delayed due to ship delays, and on the other hand, Chinese product exports were restricted by the shortage of containers.

 

According to economic data released by my country, China set a new record of trade surplus in November-US$75.4 billion, and exports increased by 21.1% year-on-year. Among them, exports to the United States led the growth and hit a record high. Analysts pointed out that the surge in trade imports to China is contrary to the expectations of U.S. bipartisan politicians. Although the Trump administration has imposed various restrictions on Chinese goods, there are few signs that the global supply chain will move closer to the U.S. On the contrary, the long-term impact of the epidemic on the United States seems to strengthen the position of China's manufacturing industry.

 

According to port carriers, due to the heavy congestion of major ports in the United Kingdom and the United States, a large number of containers have been stranded in these ports, which has affected global container turnover. The shortage of empty containers in Asian ports is so serious that carriers sometimes cannot guarantee Loading cargo at Asian loading ports.

 

Although carriers have made every effort to send empty containers from the United States to Asia-these measures even include "self-harm" measures such as drastically reducing the free container period, they still cannot change the reality of a serious shortage of containers in Asia, especially in China The ports of Xiamen, Ningbo and Shanghai, so that some ships cannot leave Asia with full load.

/ By TJ China Freight / Shipping

The latest data show that the shortage of empty containers in Asian ports will continue until at least next year

The latest report released by the shipping consulting agency Sea Intelligence shows that the shortage of empty containers in Asian ports will continue this year, at least until January next year.

The biggest problem facing the container shipping industry is that some key regions, especially Asia, are facing a serious shortage of empty containers.

The short interest of empty containers is also the main reason that pushes the spot container freight market to historical highs, and it is also the main reason why shippers who want to be able to ship their products in time are very annoyed.

Some reports pointed out that due to the shortage of empty containers, the current impact on domestic exports has emerged.

Investment securities noted in exports , China's exports of most goods were transported by sea containers . The greater the export freight volume, the greater the demand for containers and the higher the freight rate. The freight rate index is consistent with the export year-on-year trend.

This year, SCFI began to increase prices at the end of May, matching the time when the European and American economies were unblocked. That is, the demand for Chinese goods increased after overseas unblocking, corresponding to the positive export growth rate from June; and the SCFI price increase has accelerated significantly. At the beginning of November, the export growth rate in November increased by 9.7 percentage points to 21.1%. From this perspective, based on SCFI's repeated record highs since December, exports remain strong in the short term.

 

The latest data show that the shortage of empty containers in Asian ports will continue until at least next year

 

 

On the supply side , under the high trade surplus, empty containers have been left without return, which has exacerbated the shortage of containers.

The China Container Industry Association stated that the average turnaround time of containers in China has jumped from 60 days to 100 days due to the reduction of capacity in the United States and Europe due to the virus, which has exacerbated the shortage of containers in China .

Some US importers have stated that they cannot receive the goods on time during the November-December shopping season. This will result in companies unable to deliver enough goods to meet consumer demand during local holidays.

Faced with this important problem of serious shortage of containers, I believe that the highest priority for everyone in the industry (consolidation industry, foreign trade industry) must be: when can the problem of container equipment shortage be solved?

In the latest market report, the shipping consulting agency Sea Intelligence modeled the overall state of the market based on advanced regional data. Through the estimation of the global container pool and global shipments, the base time required for a container to be loaded in Asia, complete its voyage, and to be loaded again in Asia is determined. Then, use Container Trade Statistics (CTS) demand data and Asia's potential empty container buffer inventory to supplement the explanation, and finally achieve the purpose of calculating the availability of empty containers in Asia.

 

The latest data show that the shortage of empty containers in Asian ports will continue until at least next year

By simulating 4 different strategies for the carrier (shipping company, etc.) to potentially solve the shortage of empty containers:

(1) Do not take any measures against the shortage of empty containers;

(2) Actively relocate empty containers on routes exported to Asia;

(3) Inject new containers to reduce the current burden;

(4) Operators actively take measures to reposition the containers and inject new containers.

The figure above outlines these strategies and their resulting impact on the availability of empty containers in Asia.

Given the above data model, SeaIntelligence pointed out that the only possible solution to this problem in January is when the shipping company has to purchase new containers and actively reschedule the return of empty containers . In fact, major shipping companies are also actively pursuing and attempting to implement strategies.

However, Sea Intelligence stated that this strategy will also cause serious problems for return shippers.

The market is therefore faced with a severe choice-either the carrier pursues the current strategy to achieve the goal of solving the container shortage in January next year, or the shipping company reduces their aggressive container repositioning strategy for the benefit of return shippers. But the result will be that the shortage of empty space will last at least until February next year, or even longer.

The latest data show that the shortage of empty containers in Asian ports will continue until at least next year

Shipping companies suspend bookings for Asia-Europe heading

With the lack of empty containers, shipping companies also feel that they have more than enough energy. Some shipping companies have to reduce or suspend bookings for a period of time in the future.

Not long ago, CMA CGM, the world’s fourth-largest container shipping company, announced that it would stop accepting bookings from Asia to Europe in the next three weeks. Specifically, the company temporarily suspended the 49th, 50th and 51st week of this year’s Asia-Northern Europe route. Booking.

Then, according to the Danish shipping media shippingwatch, Maersk and ONE also said recently that they had to refuse some inquiries.

The world’s largest shipping company Maersk stated in a written reply to the media, “The current situation in Asia is very tense. Due to the large backlog of containers, we have reduced the short-term cargo orders in the last few weeks of December to a minimum, and Several voyages had to be stopped (reservations accepted)."

Singapore-based ONE Shipping said that the current industry is developing very fast, and the company is no longer able to accept goods transferred from other container companies.

In reply to the shipping company, the company wrote: "It is impossible to accept new transfers from other shipping companies, but we can basically meet the needs of existing customers without any substantial cancellation of bookings."

/ By TJ China Freight / Shipping

note! Epidemics in Europe and America continue to fight back! London’s highest level of blockade, New York or all blockade! The end of the port delay is suspended!

Winter is coming, Europe and the United States continue to fight back against the epidemic! The most advanced blockade in London, England, or full blockade in New York!

The continuation of the new crown epidemic has caused shipping companies to continue to face port backlogs and ship delays. The tail-end logistics delivery also depends on luck. International supply chains are becoming increasingly tense and global trade is facing the risk of disruption.

Epidemics in Europe and America counterattack menacingly

According to data from Johns Hopkins University in the United States, as of 7:27 on the 16th Beijing time, there were 73,365,192 confirmed cases of new crowns worldwide, and 1,632,554 deaths. The United States is still the most severely affected country in the world, with 16,677,333 confirmed cases and 303,046 deaths.

▍London enters the highest level of blockade again, and the port is still heavily congested

It has been less than two weeks before Christmas, and people are shopping and preparing for the holiday enthusiastically. However, the epidemic in Europe has raised concerns again at this time.

The British epidemic is already a real rebound!

 

note! Epidemics in Europe and America continue to fight back! London's highest level of blockade, New York or all blockade! The end of the port delay is suspended!

 

 

According to the latest epidemic report, there were 18,450 newly diagnosed cases in the UK in a single day, and a total of 1,869,666 confirmed cases; 506 new deaths in a single day, and a total of 64,908 deaths.

 

note! Epidemics in Europe and America continue to fight back! London's highest level of blockade, New York or all blockade! The end of the port delay is suspended!

 

 

note! Epidemics in Europe and America continue to fight back! London's highest level of blockade, New York or all blockade! The end of the port delay is suspended!
Infection in London

On the afternoon of the 14th, the British Secretary of Health Hancock officially announced in the House of Commons that London, the west and south of Essex, and the south of Hertfordshire will be upgraded to the strictest level three lockdown from Wednesday (16th). .

 

note! Epidemics in Europe and America continue to fight back! London's highest level of blockade, New York or all blockade! The end of the port delay is suspended!

After the escalation of the Level 3 lockdown in London, the following measures need to be strictly observed:

• Bars, restaurants, and cafes are closed, and only take-out and delivery services are reserved;

•  Shops, gyms, and barber shops can continue to be open;

•  People are not allowed to socialize with people from other families indoors, private gardens or most outdoor public places;

•  Up to 6 people can socialize outdoors;

•  Fans are once again prohibited from entering football fields and other stadiums;

•  Cinemas and bowling alleys are closed;

•  People are advised not to go to the tertiary lockdown zone.

British Health Secretary Matt Hancock warned on Wednesday that according to current trends, the government will have to take stricter measures in the capital to effectively limit the spread of the new crown virus.

The Mayor of London warned that “if London enters the third level of lockdown, it will be catastrophic for those industries that have been severely affected by the new crown pandemic.”

note! Epidemics in Europe and America continue to fight back! London's highest level of blockade, New York or all blockade! The end of the port delay is suspended!

Although London was initially listed as a “second-tier lockdown” city when the nationwide blockade measures were lifted on December 2, London’s current level of restrictions will be reassessed next week, just as the relaxation of Christmas regulations is coming A few days before it becomes effective.

In addition, severe congestion in most ports in the UK has forced several shipping companies to impose congestion surcharges and cancel some flights.

British importers are currently facing major challenges, and the shipping division of the Ocean Alliance decided to transfer the other five ships that arrived in Felixstowe in December to Zeebrugge, Belgium. Cosco Shipping Azalea, Ever Goods, Ever Globe, CSCL Jupiter and CSCL Uranus will no longer call at Felixstowe, and will unload British imports at Belgian ports.

British ports continued to increase congestion, 2M abandoned Felixstowe and switched to Liverpool, and major shipping companies cancelled berthing at hub ports. Starting from the end of this year, the 2M Alliance has replaced the Port of Felixstowe with the Port of Liverpool on its TA2/NEUATL2 ring route across the Atlantic.

In addition, in front of the cargo entrance of the Eurotunnel in the Port of Dover in the UK, trucks waiting in line to enter were parked, and the congestion continued for several kilometers.

note! Epidemics in Europe and America continue to fight back! London's highest level of blockade, New York or all blockade! The end of the port delay is suspended!

▍New York City in the United States may be completely blocked, 23 container ships are waiting at anchorage in California

On December 14, local time, New York City Mayor Bill de Blasio (Bill de Blasio) said that due to the deterioration of the new crown pneumonia epidemic, there is a possibility of a complete lockdown in New York City.

He said that since May, he has never seen the current level of new coronavirus infections. Action must be taken to stop this growth momentum. The number one job at present is to protect the health and safety of residents.

In an interview with CNN, Bai Sihao said: “We must start to close the most sensitive areas.” When asked about possible lockdown measures, he said, “I think we must be prepared in the next few weeks to deal with the current new crown pneumonia. With the momentum of the epidemic, we must stop it before it causes too much damage and too much pain."

New York Governor Cuomo pointed out that on Monday, a total of 5,712 patients with COVID-19 were treated in hospitals across New York State. At the peak of the spring, more than 18,000 COVID-19 patients were hospitalized.

Both de Blasio and Cuomo agreed to ban indoor dining in New York City from Monday to curb the surge in hospital admissions. However, they are divided on the circumstances under which they will issue the city-wide blockade order.

note! Epidemics in Europe and America continue to fight back! London's highest level of blockade, New York or all blockade! The end of the port delay is suspended!

According to the latest data released by the Port of Los Angeles, the port's container throughput in November increased by 22% year-on-year to more than 889,000 TEUs. Gene Seroka, executive director of the port, said that every part of the logistics supply chain of major ports around the world is still under constant tension.

On Tuesday, 15 container ships berthed at the Port of Los Angeles, but there were 23 more anchored at the anchored San Pedro Bay. Of these, 14 will go to berth in Los Angeles and 9 will go to berth at Long Beach Port.

It also introduced, “The stay time of containers at the terminal remains at about 5 days, which is twice as long as before the surge in imports in the summer. However, the average waiting time for warehouses and storage space is currently only 6.3 days compared to 7.1 days in October. Get better."

"The situation at the anchorage is currently a real concern for all of us. Many ships currently need to anchor and enter a waiting mode before berthing," Seroka continued. In November, 50 of the 88 ships that arrived in Los Angeles had to drop anchor first, with an average berthing time of two and a half days. So far in December, about 80% of arriving ships will drop anchor first. Now the waiting time has increased to 4 days. "

▍Germany issued the strictest blockade order 

On the 13th local time, the German Federation and the state governments agreed to further tighten the epidemic prevention and control measures from the 16th until January 10, 2021.

Retail stores except for food and essential daily necessities will be closed;

Schools and kindergartens will stop teaching face-to-face courses, but will provide distance education;

Business employers should provide employees with vacation or home office solutions.

According to the media, the strength of this "hard blockade order" is almost equal to that of the "wide blockade."

In addition, German Chancellor Angela Merkel warned that Germany will face a new peak of new crown infections next month, which makes people suspect that the hard blockade imposed on Wednesday may not end in early January as originally planned. It is reported that German law requires the government to re-evaluate the nationwide blockade every four weeks.

DHL suspends services in 12 European countries

The current logistics situation really puts some cargo owners in trouble. According to freight forwarders, Hong Kong DHL standard channels have added 6 countries with 0-5KG parcels suspended for shipping services.

The six countries are the Czech Republic, Poland, Hungary, Finland, Turkey, and Bulgaria. In addition to the previously suspended countries-Austria, Germany, Portugal, Spain, Romania, and Nigeria, 12 countries have suspended delivery services.

Congestion and delays in UPS, FedEx and FBA are commonplace. Now even USPS has been complained by sellers that USPS delays have ruined Christmas.

Many sellers abroad have begun to complain about the surge in USPS delays, leading to a surge in complaints from buyers. There are even eBay sellers that have started a holiday mode and plan to return to sell after January.

According to foreign media reports, outside the United States Post Office on Broadway, USPS delivery trucks are already in long queues. A truck driver has been waiting for 16 hours to unload the truck’s packages. Finally, after many round trips, they waited for two. After a day and a half, the USPS truck driver was finally able to unload his cargo.

note! Epidemics in Europe and America continue to fight back! London's highest level of blockade, New York or all blockade! The end of the port delay is suspended!

Outbreaks in other countries

Japan : In view of the continuing deterioration of the epidemic, the Japanese government announced on the evening of the 14th that it will temporarily suspend travel subsidies aimed at encouraging consumption across the country. Japanese Prime Minister Yoshihide Suga announced on the evening of the 14th that from December 28 to January 11, 2021, the country will suspend the "go travel" tourism subsidy program, and the government will compensate the operators for some of the losses.

Netherlands : In view of the rapid development of the new crown epidemic, Dutch Prime Minister Rutte made a television speech on the 14th, announcing that it will comprehensively upgrade prevention and control measures, including closing schools, closing "non-essential" stores, avoiding unnecessary travel, and working from home as much as possible. 

Singapore : Singapore’s Prime Minister Lee Hsien Loong delivered a national speech on the 14th, announcing that Singapore will enter the third phase of relaxation of epidemic control measures on December 28. Singapore’s anti-epidemic inter-departmental working group further explained that starting from December 28, the government will further relax restrictions on the flow of people in shopping malls and retail stores, and tourist attractions can also apply to increase passenger capacity. In addition, the government has increased the maximum number of attendees for indoor and outdoor live performances to 250 people.

Palestine : Palestinian Prime Minister Ashtiye said on the 14th that whether to receive the new crown vaccine depends on personal wishes, and the Palestinian government will not force people to receive the new crown vaccine. The new crown vaccine is expected to begin to arrive in Palestine at the beginning of next year, when medical staff and the elderly will be given priority.

Rwanda : Rwanda’s Ministry of Health, Daniel N’gamij, said on the 13th that while the country’s current confirmed cases of new crowns have surged, the number of deaths has also increased, and the Rwanda epidemic has entered a “dangerous stage”. He called on all people to comply with the new crown epidemic prevention measures and avoid going to crowded places and participating in social gatherings when unnecessary.

/ By TJ China Freight / Shipping

Drewry: The shortage of containers is not the lack of equipment

The research of De Luli Company shows that the shortage of usable containers faced by cargo owners is mainly due to operation, rather than lack of equipment.

In early 2020, some factories in China were closed due to the epidemic, and the number of containers in circulation has declined, but the decline in container shipments has been even greater. De Luli said:

By the end of 2020, the number of global marine container equipment is expected to drop by 1.1% to 39.9 million TEU, and the global container port throughput is expected to drop by 3.3% in 2020 . The two are not synchronized .

In the second half of 2020, container trade volume has risen sharply. With the increase in e-commerce activities after the closure of large consumer markets, demand has rebounded. A key indicator for measuring the availability of container equipment- the ratio of port throughput to each container is only 20 in the second half of 2020. This figure is in line with historical trends and indicates that there are enough containers to meet cargo demand .

Drewry believes that there are two reasons for the current shortage of boxes:

First, in the second quarter, due to sluggish demand, a large number of suspensions made the distribution of containers more uneven, and the weakening of liquidity made some ports' containers remain vacant;

Second, the unbalanced global economic recovery has resulted in an unbalanced shipping volume on routes, and the surge in freight demand has stimulated investment in new container equipment.

De Lori said: "Global container production shrank by 35% in the first quarter, while the container manufacturing industry has recovered by the end of the year. It is expected that container production will reach 2.7 million TEUs in 2020, a 5% drop from 2019."

Large operators are also increasing container equipment. Maersk stated in its third quarter report that it would invest in building more containers instead of ships; Hapag-Lloyd added about 250,000 TEU of equipment this year; CMA CGM increased 8.7% in the second half of the year. container. The increase in demand has pushed up container prices. In October, the price of a 20-foot TEU has reached US$2,650. It is expected that prices will rise further, and container leasing fees will continue to increase accordingly.

/ By TJ China Freight / Shipping

There is another shipping cost of 10,000 US dollars, which is crazy! The freight rate of the European line increased by 230%! Container freight soared and hit a new high!

In response to the current serious shortage of containers in the Asian market, Hapag-Lloyd CEO Habben Jansen recently stated that “the congestion of the port and the strong demand in the market have caused the increase in traffic to exacerbate this problem. This kind of tension will continue for another 6-8 weeks. It will be alleviated.” The pressure on the supply chain caused by the shortage of containers in Asia will continue for at least another 6-8 weeks, which means that shortages will still be faced in the next two months, which will also affect shipments before the Spring Festival.

Container freight rates continue to soar, reaching high levels far above the long-term sustainable level. The Shanghai Container Freight Index (SCFI) set a record of 2131.71 points, an increase of 162% over the same period last year. After experiencing a sharp increase in freight rates that initially lags behind the Pan-Pacific region, spot freight rates in northern Europe have soared up 230% compared to the same period last year. Moreover, the freight quotation in Asia and Northern Europe has reached US$10,000 per 40-foot high cabinet.

 

There is another shipping cost of 10,000 US dollars, which is crazy! The freight rate of the European line increased by 230%! Container freight soared and hit a new high!

According to the shipping index released by the Shanghai Shipping Exchange in the latest issue, the overall export container shipping market in China remains high. The freight rates of most ocean routes operated steadily, and some increased significantly, and the composite index rose. On December 11, Shanghai's comprehensive export container freight index was 2311.71 points, an increase of 8.6% over the previous period.

 

There is another shipping cost of 10,000 US dollars, which is crazy! The freight rate of the European line increased by 230%! Container freight soared and hit a new high!

Asia to Europe (Far East Europe Mediterranean route) : Near the end of the year, the volume of the European market remains high. The recurrence of the epidemic has also stimulated the growth of local import demand and strong transportation demand. The lack of containers in the market also affects European routes. Strong market demand and severe equipment shortages are expected to continue after the Spring Festival in 2021.

Last week, the average occupancy utilization rate of ships in Shanghai Port remained at the full level. Affected by this, most airlines increased their freight rates sharply in the middle of the month, and the spot market booking prices rose sharply. On December 11, the freight rate (sea and ocean surcharges) for exports from Shanghai to the European basic port market was US$2,948/TEU, an increase of 24.2% from the previous period. In the Mediterranean route , the market situation is basically the same as that in Europe, and the spot market freight rate has risen sharply. On December 11, the freight rate (sea freight and ocean freight surcharges) for exports from Shanghai to the Mediterranean basic port market was 3073 US dollars/TEU, breaking the 3000 US dollars mark, an increase of 28.9% from the previous period.

 

There is another shipping cost of 10,000 US dollars, which is crazy! The freight rate of the European line increased by 230%! Container freight soared and hit a new high!

 

 

There is another shipping cost of 10,000 US dollars, which is crazy! The freight rate of the European line increased by 230%! Container freight soared and hit a new high!

However, there is news that the actual freight paid by the shipper is much higher in order to ensure the container and the final remaining European space . Lars Jensen of SeaIntelligence said that there is anecdotal evidence that the exact freight paid by shippers on the Asia-Northern Europe trade route may be as high as US$5,000 per TEU. Jensen explained: “In this case, it’s important to note that in some cases, SCFI underestimates the actual freight paid because there are additional costs related to equipment and space availability.”

A British freight forwarding company confirmed to The Loadstar that the freight quotation in Asia and Northern Europe has reached US$10,000 per 40-foot high container . "It's crazy," he said.

At the same time, all carriers will raise GRI again on December 15 . The current extreme shortage of 40-foot high cabinets suggests that alternative alternatives will continue to increase in freight rates this week; it is worth noting that due to port congestion and limited land capacity, cargo to the UK is subject to many restrictions, and delays and operational problems are expected. Some carriers stopped accepting bookings sent to the UK.

Due to the strong demand for containers and the backlog in recent weeks. CMA CMA CGM notified that it will temporarily stop accepting bookings from Asia to Europe, that is, temporarily suspend bookings for the 49th, 50th and 51st week Asia-Northern Europe routes. Another shipping company recently told Asia-Northern Europe customers that if the shipment is cancelled within two weeks after the shipment date, it hopes to charge a fee of US$1,000 per TEU.

There is another shipping cost of 10,000 US dollars, which is crazy! The freight rate of the European line increased by 230%! Container freight soared and hit a new high!

Asia to North America (trans-Pacific eastbound route): The US epidemic is showing a trend of major outbreaks, with new cases hitting new highs in a single day. Severe epidemics have caused frequent port congestion and blocked transit. The problem of equipment imbalance in Asia continues, and supply and demand are severely unbalanced. Ningbo Port, ports in Southeast Asia and Busan Port are the loading ports with the most serious equipment shortages. The carrier's cargo backlog has become more serious, and it is increasingly difficult to book containers.

Last week, the average space utilization rate of ships on the Shanghai Port to West and East US routes remained close to the full load level. The freight rate is high and stable, and the spot market booking price is basically the same as the previous period. SCFI data shows that the spot freight rate from Shanghai to the east coast of the United States increased by 104 U.S. dollars to 4804 U.S. dollars per FEU, an increase of 91% over the same period last year, while the freight rate to the U.S. West Coast was basically the same at 3,984 U.S. dollars/FEU. Nevertheless, it has increased by 188% compared to the same period last year.

There does not appear to be any sign of slowing down in freight volumes to the West Coast of the United States. The Port of Los Angeles expects that containers will increase by 48% and 44% in the next two weeks. The Los Angeles and Long Beach terminals are under tremendous pressure due to the sharp increase in throughput. According to forecasts, the total volume of the Port of Los Angeles in the fourth quarter will increase by 40% year-on-year, exceeding 850,000 TEUs. Ships are waiting at the anchorage in San Pedro Bay for a long time. 6 days.

There is another shipping cost of 10,000 US dollars, which is crazy! The freight rate of the European line increased by 230%! Container freight soared and hit a new high!

Jon Monroe of Jon Monroe Consulting, Washington State, said: "Consumer recovery is gaining momentum. Black Friday sales have grown strongly, up 21% from last year. If you have not ordered the goods shipped before the Lunar New Year, you may be too late. Up."

South American routes: The raging epidemic has affected the production capacity of South American countries, their dependence on foreign materials is high, and transportation demand has remained high. In this period, most of the average space utilization of ships in Shanghai Port is at the full load level. Near the middle of the month, most airlines increased their booking prices, and the spot market freight rates rose. On December 11, the freight rate (sea and ocean surcharges) for exports from Shanghai to the South American basic port market was 5876 US dollars/TEU, an increase of 12.5% ​​from the previous period.

In other routes, SCFI's spot freight rates have risen almost across the board. For example, the freight rates from Asia to South Africa rose 15% this period to US$2,289 per TEU, an increase of 130% over the same period last year.

/ By TJ China Freight / Shipping

It’s hard to find a container, so why are some people afraid to take orders easily?

As my country's foreign trade exports gradually stabilized and improved, the lack of domestic export capacity has appeared in many places, and for a period of time, it has also been accompanied by a shortage of containers.

Recently, a 1℃ reporter from China Business News found that the main reason for the “difficult to find one container” situation was that due to the epidemic, the efficiency of container turnover was reduced, and the port congestion caused a large number of delays in shipping schedules, which further aggravated the return of containers. smooth. With the efforts of domestic container manufacturers in recent months, the shortage of domestic containers has improved, and the shortage of some ports has eased.

 

It's hard to find a container, so why are some people afraid to take orders easily?

However, new container manufacturers dare not continue to expand production capacity. Because of the epidemic, market uncertainty continues.

According to the 1℃ reporter's further on-site investigation, the shortage of containers has stimulated the kinetic energy of new container construction in China, and the prices of raw materials and labor have risen. The ex-factory price of new containers will rise accordingly. For the high freight rates, it is the foreign trade companies that ultimately suffer the loss of profits.

Inefficient port congestion

On the afternoon of December 2, when the 1℃ reporter arrived at Shenzhen Yantian International Container Terminal, the containers were piled up like a mountain, and heavy semi-trailer trucks entered and exited in file at the gate: the first class trucks were fully loaded with the containers that were about to be exported and went through automatic inspection. The passage enters the terminal, and the other type is an empty truck, which enters the gate and exits after the airspace cabinet. Many large trucks are still lining up to pick up the containers.

Chinese exports with a major source of container in two aspects, one is emptying the old container port after unloading , the second is Chinese-made box business of new office box . According to statistics from China Container Industry Association, usually the storage size of empty containers at ports is about 4 million TEU (Twenty-feet Equivalent Unit, the international standard unit, a container with a length of 20 feet is the international unit of measurement), and the port unloads old containers. It is the main source of supply for export boxes in my country.

We have not yet seen data on how many empty containers are available in the yards of domestic ports such as Yantian Port, but statistics from the China Container Industry Association show that since this year, China’s major foreign trade container ports have unloaded old container stocks with export growth and overseas adjustments. Due to restrictions on the return of empty containers and other factors, the unloaded old container stock of the seven major foreign trade container ports continued to decrease from about 3.05 million TEU at the end of February 2020 to about 1.85 million TEU at the end of October, compared with the same period in the past five years A reduction of 26%.

 

It's hard to find a container, so why are some people afraid to take orders easily?
Photo: Yantian International Container Terminal is located in Dapeng Bay, east of Shenzhen. Photo/Wu Mianqiang

At present, domestic export containers are still very tight. In addition to the fact that container transportation has broken the original arrival and delivery balance level, the decline in container circulation speed and port congestion are also one of the main reasons.

As the "barometer" of global trade, containers have a complete set of operating procedures. According to people in the shipping industry, taking shipping as an example, the port terminal is a transfer station for containers. Export companies book space and containers from the freight forwarder. After passing through the export customs broker, the trailer fleet consisting of semi-trailers goes to the terminal and other yards to pick up containers After the container is filled with cargo, it is sent to the port terminal for export. After the liner arrives at the destination port with the container, the local cargo owner arranges customs clearance, picking up the container, unloading, and returning the container to the terminal yard. After waiting for the local export company to book, pick up the container and load the cargo, the container will be transferred back to China by liner.

However, the lingering epidemic has affected the efficiency of the above-mentioned container operations. Overseas epidemics have repeated, and the efficiency of local cargo owners in customs clearance, container picking and unloading is low. The relevant person in charge of the Guangdong small appliance export company previously interviewed by the 1℃ reporter said that their company's goods are in the ports of European and American countries .

Affected by the epidemic, many countries have experienced labor shortages, especially port operators, trailer truck drivers and related logistics personnel.

Master Sun, a truck driver picking up cargo at the Shenzhen container yard, told the 1℃ reporter that the company’s overseas business divisions had a "labor shortage". The United States had just finished Thanksgiving and will enter the Christmas season, which will further increase labor. tension.

The China Container Industry Association recently issued an "Action Initiative for Enterprises in the Container Industry Chain to Work Together to Stabilize Foreign Trade and Promote Growth", which stated that "Due to the increase in the number of infected people and the requirements of epidemic prevention measures, shippers (from across the ocean) cannot normally get from ports. The goods are shipped out of the cargo yard, and some goods are even rejected after arriving at the port. This has caused more and more containers to be piled up in disorder at the port. This disordered storage has caused the shipping company’s ships to be unable to dock and offshore on schedule. Affected the turnover efficiency of containers."

"From a global perspective, the supply chain of container transportation has slowed down. This is also one of the important factors that have caused global container tension." said Zhao, who has been in the shipping industry for more than ten years. Therefore, ports are definitely better than Congestion in the past was inevitable.

The prevention and control of the epidemic has also reduced the efficiency of domestic container operations. Lao Zhao recently told reporters at 1℃ that after the liner arrived at the domestic port, compared with the non-epidemic period, the quarantine process and procedures have increased. For example, the container needs to be disinfected, which leads to a longer time for customs clearance and unloading. "The crew cannot go ashore. It needs to be isolated and rotated first."

Port congestion will lead to adjustments in shipping schedules and affect the efficiency of container transportation. Since the third quarter of this year, the Ocean Network Express (ONE) of the TA Alliance has continued to update the schedule adjustment notice on its official website. The reporter at 1℃ found that most of the reasons were caused by port congestion.

From December 1st to 4th, ONE continuously issued more than 20 notices regarding the Shanghai Port shipping schedule changes or late opening notices, mostly due to "the effect of port congestion causing delays in shipping schedules." In the past November, there were more cases of ship delays due to port congestion. ONE is a Japanese container shipping company headquartered in Tokyo and Singapore. It was established as a joint venture by a Japanese shipping company in 2016, with a fleet of over one million TEUs.

"Once there is congestion in the port, the operation efficiency of containers will be low, which will further aggravate the tension of container use." Lao Zhao said.

As the international container ocean trunk transportation hub port in South China, Yantian Port is one of the world's largest single-handle container terminals. It mainly serves routes exported to Europe and the United States. Nearly 100 liner routes reach Europe, the United States and other regions every week. The 1℃ reporter found on the scene that the port was busy, and the gates were still slightly crowded. Many large trucks stopped at the door and waited for the relevant procedures to be completed, while the large trucks that had already lifted their cabinets slowly pulled out of the cracks.

It's hard to find a container, so why are some people afraid to take orders easily?

Cost rises, logistics prices soar

The shortage of domestic export containers has caused the single-container market price to soar. As the order volume of container manufacturers increases, the cost of raw materials and labor has increased. In addition, the shortage of shipping space has further increased the cost of export containers for enterprises, increasing the logistics cost of the foreign trade industry and eroding the profits of export enterprises.

In fact, more than 90% of global containers are currently supplied by Chinese companies. According to the research report of Dongxing Securities, on the container production side, CIMC (CIMC, market share of 44%), Shanghai Universe (DFIC, market share of about 24%), and Xinhuachang (CXIC, market share About 13%), Singamas (about 3% market share) occupy most of the market share.

According to data released by the China Container Industry Association, there are three main types of container buyers. One is shipping companies, the other is container leasing companies, and the third is domestic railway and logistics companies . The third category accounts for a very low proportion, not exceeding all. 8% of annual container production and sales. The total production and sales of China's container manufacturers are between 2 million and 3 million TEU each year, and the storage of new containers accounts for 10%-20%.

1℃ reporters interviewed shipping companies and container manufacturing companies in many ways and learned that in the first five months of this year, China’s container manufacturers had almost no new orders. The pessimistic judgment of China has reduced liner shipping capacity and container procurement plans.

However, after June this year, my country's foreign trade quickly recovered. After the empty containers at the port were digested, the information of the lack of containers in the market was transmitted to the container manufacturers in mid-July, and orders continued to increase. "In September, our order volume has been scheduled to March next year." A person from CIMC Group who did not want to be named told 1℃ reporter.

"As a container equipment provider, we mainly produce according to shipping company orders. The shipping industry is currently booming and freight prices are rising. Therefore, shipowners and container leasing companies are also willing to purchase large quantities of containers." Liu Meng, a senior employee of a major domestic container manufacturer (Pseudonym) said.

Continued hot container production orders have caused the price of raw materials in the container supply chain to rise, including raw materials required for container production such as steel, wooden floors, and paint.

Insiders of Singamas Containers told 1℃ reporters that according to their understanding, steel, wood floors, and paint have all increased in varying degrees since the beginning of this year. "Compared with the off-season in the first half of this year, the price of steel has increased by about 10%, and the current average is more than 4,000 yuan per ton, and the wood floor has increased by 50% year-on-year." A relevant person in charge of a container manufacturer told 1℃ reporter.

The number of container floor sales is consistent with the trend of China's container export volume. In the raw material sector, the shortage of wood flooring is the most obvious, so prices have also increased significantly.

Kangxin New Material (600076.SH) is the only listed company in China that is mainly engaged in container floor panels. The company’s securities department confirmed that its finished product prices this year have exceeded the same period last year, "because of the increase in raw material and labor costs."

The main raw material of the container floor is logs. A domestic container bottom plate supplier told the 1℃ reporter that the current price of wood has increased significantly, and the purchase price of better poplar wood ranges from 800 to 1,000 yuan, which is more than 50% higher than when the market was normal. In the case of shortage, if the price is not increased, the timber merchant will not deliver the goods to the transaction."

The increase in supply chain costs has also driven up the selling prices of container products . A few days ago, a reporter from 1℃ asked CIMC insiders about the order status in the name of the leasing company. The salesperson of the other party said, “Orders are very slow now, and they need to wait until March next year to deliver them, mainly now (production orders). Don't go in."

The above-mentioned sales staff stated that the current order volume of the company is mainly unified at the head office level. “The selling price of 20-foot container (standard box) is now US$2,600, 40-foot container (high container) is US$4420, and 40-foot container (flat container) is 4210. Around the dollar."

Compared with last year, the price of new boxes between US$1600 and US$1700 has increased significantly. According to the research report of Dongxing Securities, in August this year, the price of a new container was only US$2,100.

"The epidemic is a double-edged sword, both an opportunity and a challenge." Recently, Lao Zhao said. Most of the foreign trade companies that have survived now have received many foreign orders, but at the same time they have encountered high freight costs caused by the shortage of containers and the shortage of space.

"Many of our company's customers, currently doing foreign trade orders, are not making enough money to pay for sea freight. Examples of this are everywhere. Even if they lose money, they still do it because they have a long-term vision and want to maintain good customers first. In the future, the freight rate will be lowered and then the profits will be made back." A business executive who has been a freight forwarder in East China for 10 years told 1℃ reporter.

I dare not rush to expand production after receiving orders in the first quarter of next year

On the evening of December 2, a 1℃ reporter came to the container production workshop of Dongguan South CIMC Logistics Equipment Manufacturing Co., Ltd. (hereinafter referred to as "South CIMC"), a subsidiary of CIMC Group, Fenggang Town, Dongguan City. A scene in full swing.

This is one of the largest container production bases in the country, and it is said that 1 out of every 10 containers in the world goes to sea here.

Worker Master Wang (pseudonym) had just left work and was riding a battery car to go home. He told the 1℃ reporter that the factory orders are currently full and he worked 11 hours that day. "Our factory is now operating in two shifts and is producing at full capacity," a person close to Southern CIMC told 1℃ reporter.

Since the third quarter of this year, as CIMC's order volume continues to increase, Master Wang has many colleagues who come to help temporarily. The 1℃ reporter learned during an interview with Southern CIMC that the plant has added many new temporary workers this year. “Most of them are labor dispatch employees, and the average daily salary of each person is 300 yuan, which is tens of thousands of yuan a month.” A labor dispatch company who recruited welders in a container factory of CIMC Group introduced.

"The main reason is that the container manufacturing industry is deeply affected by the shipping industry. When the market is good, the number of orders will increase, and if the production is at full capacity, there will be a shortage of manpower; when the market is not good, the number of orders will decrease, and manpower will be sufficient or even surplus. "The above-mentioned CIMC insider told the 1℃ reporter that many CIMC people (employees) still have fresh memories of the experience that factories were shut down during the financial crisis in 2008 and that they were looking forward to working at home.

On December 3, regarding the current shortage of containers and soaring freight rates in the field of foreign trade and logistics, the spokesperson of the Ministry of Commerce Gao Feng said that on the basis of the preliminary work, the Ministry of Commerce will continue to promote the increase of capacity and support the acceleration Container return transportation, improve operation efficiency, support container manufacturing enterprises to expand production capacity, and at the same time increase the intensity of market supervision, strive to stabilize market prices, and provide strong logistics support for the stable development of foreign trade.

Recently, the China Container Industry Association has also issued an initiative to "advocate container industry chain enterprises to actively invest in stabilizing foreign trade", and strive to improve the efficiency of international container turnover. Production-related enterprises should continue to improve production efficiency, continue to tap potential production capacity, and improve process equipment. Increase the number of workers, improve their labor skills, and make every effort to ensure that new box orders are delivered as soon as possible.

Affected by the current shipping situation, many large domestic container manufacturing companies are making every effort to ensure the delivery of new container orders as soon as possible to escort foreign trade exports, while also considering the future balance of supply and demand in the global container market.

In fact, the container manufacturing and sales industry and the development of the shipping industry share each other. Nowadays, aspects of container production enterprises are operating at full capacity ensure market supply; on the other hand below the epidemic, we still dare to expand production capacity.

People in the shipping industry predict 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 next year.

"The main reason is that I dare not judge the future market prospects." Liu Meng told the 1℃ reporter that the current epidemic situation continues and container manufacturers are also worried that after receiving external orders, they cannot judge the future market development. If the order is received first next year Quarterly, the supply can be guaranteed, and the market will not be turbulent at the same time, so everyone hopes to have such a steady move.

"Now that the market is in short supply, we can completely 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." Liu Meng said that the demand for containers in global trade is only There are several million TEUs, once container overcapacity occurs, it will be a serious problem.

The current life span of containers is 10-15 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." Liu Meng told the 1℃ reporter.

/ By TJ China Freight / Shipping

A 24% increase in one week, the freight rate of Asia-Europe route hit a record high! Maersk and ONE reduce bookings

Near the end of the year, the peak freight season continued to be hot, and the market freight rates continued to rise.

Especially in the European market, the demand for cargo volume remains high. At the same time, the recurrence of the new crown pneumonia epidemic has also stimulated the growth of local import demand.

At present, the average space utilization rate of ships exported from Shanghai Port to Europe has basically remained at the full space level, driving the market booking price to rise sharply.

 

A 24% increase in one week, the freight rate of Asia-Europe route hit a record high! Maersk and ONE reduce bookings
The latest Shanghai comprehensive export container freight index

According to the Shanghai Composite Container Freight Index (SCFI), on December 11, the freight rate (sea freight and ocean freight surcharges) from Shanghai to the European basic port market was US$2,948/TEU, a 24.2% increase from a week ago. Compared with the US$1,508/TEU a month ago, it has nearly doubled.

The freight rate of US$2948/TEU on the Asia-Europe route is the highest level in history since SCFI was released in 2009.

 

A 24% increase in one week, the freight rate of Asia-Europe route hit a record high! Maersk and ONE reduce bookings
2018-2020 SCFI Asia-Europe route freight trends

The rate of the Mediterranean route has increased even more. On December 11, the freight rate (sea and ocean surcharges) for exports from Shanghai to the Mediterranean basic port market was 3073 US dollars/TEU, a 28.9% increase from a week ago.

Some industry analysts believe that the actual freight rate of some goods on the Asia-Europe route is higher.

Lars Jensen, CEO of SeaIntelligence Consulting, an industry authoritative consulting firm, believes that SCFI may seriously underestimate the actual freight rate in some cases because it does not consider the additional costs associated with containers and spaces.

He said that anecdotal evidence has shown that in Asia-Europe routes, the actual freight rate of some goods has reached as high as US$10,000/FEU.

 

A 24% increase in one week, the freight rate of Asia-Europe route hit a record high! Maersk and ONE reduce bookings

The continuous period of high cargo volume, soaring freight rates, port congestion and shortage of containers have increased the risk of supply chain rupture, and more and more liner companies are controlling bookings.

Hapag-Lloyd has announced that due to severe container shortages, until the end of December this year, it will no longer accept 40-foot reefer containers from terminals in Germany, Austria, Switzerland, Hungary and the Czech Republic. In addition, the empty container of 40-foot ordinary container in Hamburg, Germany is not accepted.

This means that bookings in these countries will be affected.

 

A 24% increase in one week, the freight rate of Asia-Europe route hit a record high! Maersk and ONE reduce bookings

In addition, Maersk and ONE also indicated to the media that before the New Year, they will have to reduce their bookings in Asia.

Faced with criticism that liner companies’ reduced bookings will affect shippers’ shipments, the World Shipping Council, headquartered in the United States, stated: “No one can predict the surge in demand for container shipping this year. see."

The organization believes that the solution to current problems lies in continuous communication between the carrier and the shipper. To restore the entire transportation system to a balanced state, all parties must work together to spend this critical period together.

/ By TJ China Freight / Shipping

Severe congestion and long waiting time, Vietnam’s largest deep-water port is waiting for a berth 50 kilometers

The shift of manufacturing from China to Vietnam has also put pressure on the country's container supply chain.

According to the forecast of the International Monetary Fund, Vietnam's gross domestic product (GDP) will grow by 2.4%. As many other countries fall into recession due to the epidemic blockade, Vietnam is expected to become one of the fastest growing economies in the world in 2020.

According to Simon Vandekerckove, general manager of freight logistics giant Geodis Vietnam, procurement in Vietnam is entering a new stage. The factory is overbooked. We see that overseas customers have high expectations for Vietnam, but Vietnam does not have the necessary legal or logistics basis. Facilities to achieve this.

 

"Vietnam needs a lot of investment to increase new productivity and infrastructure to cope with increasing demand, and because customers want to reduce the financial risk of sourcing from only one region, Vietnam is likely to become an outsourcing region for other ASEAN countries such as Thailand and Indonesia. one."

At the same time, the shortage of global capacity and container equipment is putting pressure on Vietnam's main container ports.

A local freight forwarder in Vietnam said that the inland river terminal in Ho Chi Minh City has been congested for a long time, and the current market conditions have increased the waiting time. The export container yard capacity is 120%, and ships need to wait two to three days to find a berth.

He added: “In Cat Lai, all shipping companies’ outbound volumes have increased dramatically, but due to lack of space, about 10%-20% of the cargo must be transferred to the next ship each time.”

Vietnam’s largest deep-water port, Cai Mep, is letting ships wait 50 kilometers away. In October, the Cai Mep International Terminal (CMIT) operated by APM Terminal received the 20,000 teu Margrethe Maersk call, which is 2M One of the direct trans-Pacific routes.

The port used to have very large container ships docked (temporarily docked), but the current demand trend may cause more and more ships to come here. Next year, CMA CGM will cooperate with local operator Gemadept to open the newest terminal in Cai Mep.

Nevertheless, the current shortage of space and container equipment and the sharp rise in costs are still a huge challenge.

Vandekerckove explained: "According to all types of freight FAK and spot freight rates, bookings from Vietnam require two to three weeks in advance to secure containers and space. To the west coast of the United States, freight rates have increased by 140%, and the Mediterranean area has increased by 70%. , The Nordic region rose by 15%."

Mr. Vandekerckove said that in most cases, air freight is not an option, but road freight provides flexible options for some customers.

/ By TJ China Freight / Shipping

Drewry analyst: The profitability of container ports this year is not as good as that of container ship owners

Drewry's report shows that the revenue of container port operators dropped by nearly US$1.9 billion in the first half of 2020. In addition to the well-known global epidemic, the decline in freight volume and port congestion are also reasons.

Drewry Port Analyst Eleanor Hadland said in the webinar: "The profitability of container ports this year is not as good as that of container ships... Our cooperative operator's transaction volume in the first half of this year dropped by 4%, while Drewry estimates global port handling volume. A decline of 5.6%... In the first half of the year, 80% of companies reported a decline in revenue. In terms of profitability, 70% of the companies’ profit before interest, taxes, depreciation and amortization in 2020 Lower."

Prior to the outbreak, Drewry predicted that sales in the first half of 2020 will increase by 4.8%. This is equivalent to a global revenue growth of more than 7%.

"However, due to a nearly 6% drop in sales volume, the revised estimate is now 5% lower than in 2019 and 11% lower than the pre-epidemic forecast. For the entire industry, we forecast the interest, tax, depreciation and amortization in the first half of the year. Pre-sales profit will drop by about 16% from 2019 and 21% lower than the forecast before the epidemic."

Most operators have taken cost-cutting measures. During the epidemic, due to the adoption of new working methods, and due to illness or quarantine requirements for workers, the terminal must pay for absenteeism, so the actual labor cost has increased.

Turkey-based operator Yildirim announced today that it will add a surcharge to cover the additional expenses during the new crown epidemic . The company said: “Since the beginning of the epidemic, Yilport Holding has taken additional measures to ensure the continuity of all business partners. However, the increased cost of additional health protection and protective equipment has made it difficult for us to balance our expenses. Since January 1, 2021 Starting today, we will charge an emergency surcharge for each import and export container ."

Martin Dixon, a shipping analyst, said: " The most important factor in the surge in ship operating costs is labor costs. Due to the inconvenience of crew changes, labor costs have soared . According to forecasts in 2019, labor costs can only increase by 1.3%, but in fact, in 2020 Labor costs rose by 6.2%."