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.
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.
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.
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.
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.
Due to the superimposed impact of the epidemic and the Spring Festival, the Guangdong-Hong Kong route barge company plans to suspend the Guangdong-Hong Kong route starting from mid-January 2021. Affected by this, many shipping companies such as ONE, OOCL, Hapag-Lloyd have issued notices and suspended Receive cargo from multiple ports in South China and other places.
Lars Jensen, CEO of SeaIntelligence Consulting, pointed out that although the mainline ships are not covered by the suspension, "the decline in the service capacity of barges will affect the entire South China connection market."
For shipping companies, there are two benefits to stop accepting space reservations: First, it can digest orders that have been received before; second, after nearly a month of empty container allocation, it will help alleviate the current shortage of containers in China’s ports. status.
In view of this, until the Spring Festival, the freight rate will not be reduced in any way, the tightness of empty containers will not be alleviated, and no bookings will continue.
Hapag-Lloyd suspends South China branch service during the Spring Festival
Due to quarantine requirements for crew sailing between South China and Hong Kong after the Spring Festival holiday in 2021, feeder operators in South China announced that they will suspend services from January to February 2021. In consideration of this situation, Hapag-Lloyd will temporarily suspend the receiving of cargo at the final destination in the Pearl River Delta and Fuzhou until further notice.
However, it will continue to accept cargo arriving at major ports (ie Hong Kong, Yantian, Shekou) via mainline services. Please note that the time of suspension of booking reception in South China is based on the estimated time of arrival at major ports.
After unloading the cargo during the outage of the feeder line operator, any other expenses and responsibilities incurred at the transshipment port (Hong Kong, Shekou, Yantian) related to detention fees, terminal storage or terminal fees will be borne by the cargo owner .
Affected ports:
Hapag-Lloyd announced on December 3 that the port is congested due to stricter customs inspections and disinfection of imported food entering Huangpu. From now on, we will temporarily stop accepting reservations for refrigerated containers entering Huangpu Port in China until further notice. At the same time, it was announced that it will temporarily stop accepting orders for imported reefer containers from Busan, South Korea to Tianjin, China, with immediate effect.
In addition, Hapag-Lloyd also announced the suspension of all 40' freezer bookings in Germany, Austria, Switzerland, Hungary and the Czech Republic until the end of December 2020.
ONE suspends receiving cargo from South China during the Spring Festival
As crews on the coastal feeder between South China and Hong Kong are required to undergo COVID-19 quarantine, the feeder operator announced the suspension of services from mid-January to the end of February 2021. Taking into account this situation, the acceptance of all container types, including dangerous goods containers, reefer containers and major cargo destined for ports in South China, Guangxi and Fujian, will be suspended. The suspension of booking arrangements through major ports in South China is shown in the following table:
Due to stricter customs inspection and disinfection requirements for refrigerated containers imported into Xiamen, Fuzhou and Fuqing ports, the delivery of inbound refrigerated containers at these ports has been slow and is facing congestion.
In consideration of this situation, starting from December 9, 2020 (shipping date), ONE will stop accepting bookings for all refrigerated goods arriving and transshipped through Xiamen, China, until further notice. For containers in transit, ONE will strongly encourage customers to consider changing the destination to other alternative ports, especially for time-sensitive goods, such as fresh refrigerated goods. For refrigerated containers that have been shipped to Xiamen or are waiting to be shipped to Xiamen at the transshipment port, please note that all related costs will be paid on the consignee’s account and paid upon delivery.
Similarly, in view of the above circumstances, starting from December 8, 2020 (shipping date), ONE will stop accepting all orders for refrigerated goods to Fuzhou and Fuqing, China, until further notice.
For containers in transit, ONE strongly recommends that customers change their destinations to other ports, especially for time-sensitive goods, such as fresh and refrigerated goods. For containers that have been transshipped to Fuzhou/Fuqing or are to be shipped to Fuzhou/Fuqing at the transshipment port, once the feeder space of Fuzhou/Fuqing is available, a specific surcharge will be charged when loading.
Previously, Ocean Network Shipping (ONE) issued a notice stating that due to stricter customs inspections and disinfection procedures for imported food goods (including meat, seafood, dairy products, fruits and vegetables), Guangzhou Huangpu Port is facing a slow, Port congestion and other issues.
In view of this, from November 26 (the day of shipment), ONE announced that it will stop accepting orders for food products shipped to Huangpu Port in Guangzhou until further notice. For goods that are already in transit, ONE recommends that customers consider changing the port of destination, especially time-sensitive goods such as chilled and frozen.
OOCL suspends barge services in multiple ports
OOCL issued a customer advisory stating that due to the epidemic, the capacity of the Hong Kong and Macau South China barge routes has dropped significantly. It is expected that during the 2021 Spring Festival holiday, the import operations of ports in South China (including Guangdong, Guangxi, Hainan, Yunnan and Guizhou) will be affected and restricted.
The specific date depends on the destination of the container:
From January 18 to February 21, 2021, barge services to Hainan/Guangxi/Pearl River Delta ports (including Huangpu, Guangzhou, Foshan, Zhuhai, Dongguan, Zhongshan, Shantou, etc.) will be suspended;
From January 16 to February 21, 2021, cargo shipments of dangerous goods to ports in the Pearl River Delta economic centers such as Guangzhou, Foshan and Jiangmen will be suspended.
From January 18 to February 21, 2021, the import of frozen products will be prohibited at ports in the Pearl River Delta (including Huangpu, Guangzhou, Foshan, Zhuhai, Dongguan, Zhongshan, Shantou, etc.);
From January 16 to February 19, 2021, the import of over-restricted cargo is prohibited at the ports of the Pearl River Delta (including Huangpu, Guangzhou, Foshan, Zhuhai, Dongguan, Zhongshan, Shantou, etc.).
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 it will affect shipments before the Spring Festival.
Hapag-Lloyd CEO Habben Jansen said that in order to meet the strong market demand, the company has added about 250,000 TEU of container equipment in 2020, but it is still facing shortages in recent months. "The congestion of the port and the increase in traffic have exacerbated this problem. I think this tension will ease in another 6-8 weeks."
Congestion means that a considerable number of ships have been postponed, which has also led to a continuous decline in weekly available capacity. Jansen called on shippers to provide more accurate demand information, and fulfill the promise of container volume in order to solve the problem. Jansen said that in the past few months, the volume of booked boxes has risen by 80%-90%. This means that the gap between the number of orders received by operators and the final shipment volume is getting wider.
He also called on customers to return the containers as soon as possible to reduce turnaround time.
"Generally speaking, the average number of times a container is used in a year is 5 times, but this year it has dropped to 4.5 times, which means that 10%-15% of additional containers are needed to maintain normal operations. This is also our request for customers as soon as possible The reason for returning the containers.” Jansen believes that the shortage of containers is one of the reasons for the record-setting east-west trunk line freight rates, but this surge is temporary and will fall back when demand slows.
The sky-high freight rates, and the hot availability of space and empty containers, are forcing freight forwarding logistics companies to charter ships and open shipping routes.
Last week, it was reported on Souhang.com that freight forwarding giant DSV Panalpina bypassed the shipping company and leased three ships and a batch of empty containers to open a new China-Denmark route. The latest news is that another freight logistics company giant DHL Global Forwarding also Is considering stepping in.
Dominique von Orelli, executive vice president of DHL Global Forwarding, confirmed to the media that the company is evaluating charter plans.
DHL considers chartering for customers
A large freight forwarding company considered direct control of ship assets, but actually entered an industry that is different from its core business in terms of operation and culture. On the other hand, it also shows how popular it is to ship containers from Asia to Europe and North America. And freight forwarders desperately provide customers with adequate services.
"There may be more freight forwarders to follow suit ." Anil Vitarana, former president of United Arab Shipping, said in a post on LinkedIn.
"If there is a continuing shortage of ship capacity and containers, and major logistics providers and 3PL find it feasible to use internal resources to integrate the economic benefits of the entire supply chain, shipping companies may regret the beginning of this trend." Vitarana wrote.
He added that the logistics provider/third-party logistics provider (3PL) team includes former executives of the shipping company and can help his current employer provide the services provided by the shipping company.
Vitarana also stated that shipping companies can also cooperate with 3PL to improve service capabilities. He pointed out that CMA CGM acquired CEVA Logistics in 2019 and Maersk included DAMCO in its integrator strategy, which has further promoted the supply chain solutions of shipping companies. Program.
But not all freight forwarders consider it necessary to provide shipping services to customers.
Two other large freight forwarders, Kuehne + Nagel and DB Schenker, said that although the container market is extremely tight, they do not think such a move is necessary.
Freight forwarding giant Kuehne + Nagel expressed confidence in products based on digital solutions and cooperative relationships with shipping companies, able to provide services to customers, and will continue to provide leasing services for project cargo, rather than container customers.
DB Schenker does not believe that chartering is one of the solutions for capacity. The current shortage of ships and chartering costs have also increased. Alphaliner, a maritime analysis agency, pointed out in mid-November that most ship charters are tight. The daily charter price of 3,000-3,500 TEU ships is US$18,000, an increase of US$2,000 from the end of October.
Thorsten Meincke, DB Schenker's board member responsible for air and ocean freight, said that the resources needed to charter and manage ships are often underestimated, which will distract attention from the reliable and robust services provided by freight forwarders.
"Once you have ship assets, you have to fill them up. This will become your focus, rather than providing customers with the best solutions," Meincke said. "The current challenge facing the maritime market is largely the shortage of containers, not just the space of ships."
Indeed, other sources also believe that despite Maersk’s efforts to redefine its business model by integrating traditional shipping and freight functions, there are still huge differences in operations and culture between freight forwarders and shipping companies.
Ship asset owners must keep their ships full and require functions and costs such as ship planning and container repositioning, and freight forwarders usually rarely consider these daily affairs.
In addition, the source said that the shipping capacity chartered by DSV is small, and its cost is far from competitive with ships of 20,000 TEU or more that travel between Asia and Europe. This is why freight forwarding and shipping are almost always in different organizations, even in larger shipping companies.
The US Federal Maritime Commission (FMC) threatened to use all its possible powers to overturn the decision of international shipping companies to abandon the export of American agricultural products and relocate empty containers instead.
The shortage of containers and market forces have caused some shipping companies to cut the container quotas of traditional American exporters to alleviate some serious problems in the supply chain. This has had a huge impact on US agricultural exports. Reports say that some cargo owners’ quotas have been reduced from 300 containers per month to three.
Under the vigorous lobbying of the U.S. Agricultural Transportation Union and its partners, FMC announced that it would investigate these measures.
"Some shipping companies have already stated that they will no longer deploy empty containers to inland agricultural areas of the United States. Instead, they are speeding up the delivery of empty containers back to Asia." FMC Chairman Michael Khouri said at the Global Maritime Conference.
"This approach is to keep U.S. agricultural exports out of the global market. We are investigating and possible response measures, including reviewing whether the actions of these shipping companies are in full compliance with the Shipping Act, and more specifically, the Act. "Prohibited Acts" clauses in the "Prohibited Acts"," he said.
At the end of October, the shipping company Hapag-Lloyd has decided to suspend export bookings for soybeans and other agricultural products from the United States in order to return empty containers to Asia to load imported goods from the United States instead of shipping containers to the inland United States.
Earlier this month, the Special Soybean and Grain Alliance (SSGA), a US agricultural transportation organization, stated that the lack of containers and its members’ inability to load exported goods is prompting Asian customers to investigate other food buyers.
SSGA Executive Director Eric Wenberg said: "Our members have heard from Asian customers that they doubt that the United States and its agricultural exporters will continue to be reliable suppliers based on the difficulties of today's multimodal transportation."
"Marine shipping companies need to work with us to solve these transportation problems and ship our goods back to Asian ports. Otherwise, the United States has been a reputation for exporting high-quality food to foreign customers and we must take action." He added.
Magic 2020, the shipping industry has breaking news every day, and it always affects the hearts of foreign trade forwarders.
Today, the Moments of Friends screened the video of the driver grabbing the box. Truck drivers flocked to "queue" to pick up the cabinet. You earn and I grab one box, and they are almost "fighting".
This is a real response. Even if the shipping company normally releases the cabin, there is no guarantee that there will be boxes. It is difficult to find a box in China.
Another heavy news is that CMA CGM will directly stop accepting bookings from Asia to Europe in the next three weeks, and temporarily stop bookings on the Asia-Northern Europe route in the 49th, 50th and 51st weeks. The European route has basically ended this year. Booking.
In recent months, due to the uneven recovery of the global economy, the rebound of epidemics in many countries, and the arrival of traditional transportation seasons such as Christmas and New Year, congestion has occurred in many European and American ports, but many domestic ports are extremely short of containers.
Under such circumstances, many large shipping companies impose additional charges such as congestion surcharges, peak season surcharges, and shortage of containers.
Following the further surge in freight rates on the European and Mediterranean routes last week, data shows that this week, China’s export container shipping market performed stably, and transportation demand remained stable. The freight rates on most shipping routes rose, which led to a rise in the composite index.
The largest increase was the year-on-year growth rate in Northern Europe of 196.8%, the year-on-year growth rate in the Mediterranean Sea was 209.2%, and the year-on-year growth rates in the West and East of the United States were 161.6% and 78.2%, respectively. 390.5%.
Shanghai Export Container Freight Index
As Christmas approaches, shippers and their freight forwarders in Europe and North America continue to generally face the problems of container shortages, port congestion, declining capacity and soaring freight rates. Many people in the industry are talking about the current "peak season" in the container industry. "When will it end?
According to the latest analysis conducted by Lar Jensen, CEO of shipping analysis agency SeaIntelligence, on behalf of the Baltic Exchange, the answer is likely to be around the Lunar New Year holiday in February, because the options available to supply chain stakeholders are very limited.
Chinese New Year will mark the end of the "peak season" of the container industry
The root cause of the current problem is the unexpected demand for container cargo due to the global social blockade.
Jensen said that there are three key issues in meeting higher levels of demand: container, ship and port capacity constraints. He wrote: "If demand decreases, the problem will be resolved immediately."
"However, shipping companies may show their determination to reduce capacity again in order to cope with the downward trend in demand. This means that very high spot freight rates will drop, and new equipment available surcharges will disappear, but the interest rate will not It's too likely to crash." He added.
In these strange years, it is difficult for the industry to reach a consensus, but there are few signs that consumer demand will decline in the short term.
Jensen said that for many shippers and freight forwarders, the most pressing problem is the serious shortage of containers, but as China's container manufacturing plants are in full production, this problem may be alleviated before the Chinese New Year on February 12.
"This problem can be solved within a few months." He said: "The solution is that the empty containers are shipped back from Europe and North America faster, coupled with the full work of China's container factories... The current situation can be After the Spring Festival, it ended peacefully."
However, it will take longer to solve the problem of global ship and port capacity. When the capacity is insufficient, the traditional approach of shipping companies is to turn to the leasing market. However, due to the surge in demand, only a few boats are available for hire.
"As a result, the time scale for increasing capacity has changed from weeks to years now, because it will require the construction of new ships. Moreover, since the peak demand may be temporary, this solution will not help solve the problem." He wrote.
Another option for shipping companies is to increase their ship speed. Faster service can free up the structural capabilities of the shipping group, although this does increase costs.
"In general, considering the optimization of fuel, when modifying or building these ships, they cannot sail as fast as ten years ago, but there is still a certain degree of additional capacity that needs to be activated. However, this also comes at a cost. , Including the sharp increase in carbon emissions."
Finally, there is the issue of port inventory, which he admits is almost powerless in the short term.
"The surge in demand and the increase in ship arrivals have not only affected the number of containers that the port can handle, but also the number of ships that can be berthed and served."
"In addition, the surge in demand has caused larger ships to arrive with more cargo than originally planned, which means longer berth stays, a chain reaction, and subsequent ships will be delayed."
"The expansion of the port's capacity can only be measured in a few years at most. In some areas, large expansion projects can take up to 10 years."
Against the backdrop of the global raging COVID-19 pandemic, this year's global container shipping industry seems to be sitting on a magical "seesaw". On one side, there is a shortage of containers and high freight rates, and the other is port congestion . The two issues alternate across oceans and continents, torturing the fragile nerves of cargo owners.
However, although industry analysts sing the recovery of the operating industry, industry insiders are still cautious about the "boom" that occurred during the epidemic, especially after the middle of next year, the market supply and demand trend is still like a fog, and there are still larger ones. Uncertainty.
The problem of shortage of containers has attracted the attention of the Ministry of Commerce. On December 3, the spokesperson of the Ministry of Commerce pointed out that, on the basis of the preliminary work, the Ministry of Commerce will continue to promote the increase of transportation capacity, support the acceleration of container return, improve operation efficiency, support container manufacturers to expand production capacity, and increase The intensity of market supervision, efforts to stabilize market prices, provide strong logistics support for the steady development of foreign trade.
The epidemic caused port failure
The problem of container shortages is happening alternately across the Pacific and the Atlantic this year.
According to Bloomberg data, in the first quarter of this year, European and American ports such as Hamburg in Germany, Rotterdam in the Netherlands, Antwerp in Belgium, and Long Beach and Los Angeles in the United States have all fallen into a state of extreme shortage of containers. The port container holdings have reached a record low, while Chinese ports are stranded in a large number of containers. Waiting for quarantine. In the third quarter, the situation was reversed. The overseas epidemic was severe and the port was understaffed. According to statistics, the Port of Sydney, Australia had piled up at least 50,000 TEUs of containers to be processed. Many ports were charged with congestion charges. Hard to find" status.
Generally speaking, problems such as shortage of containers and port congestion are routine problems in the industry, which are easy to appear in peak seasons, and are also related to port processing efficiency. However, the failure of port operations caused by the epidemic has undoubtedly extended the loading and unloading time of containers.
According to a reporter from the Securities Times, due to the need for epidemic prevention, the Port of Los Angeles has temporarily reduced the number of dockers and port personnel by about one-third, and the loading and unloading of ships has been greatly affected. Due to the continuing effects of shortages of equipment and prolonged loading and unloading time in ports, a large number of imported containers have been backlogged in European and American ports, congested terminals and poor container turnover, which has hindered cargo transportation.
The global container shortage difference can be seen from the Container Availability Index (Container Availability Index) released by the container source traceability platform xChang: In July, the supply of 40-foot containers at the Port of Los Angeles was insufficient; by the end of September, the port’s container availability index had increased by 4 times. Oversupply; since September, Qingdao Port (6.110, -0.02, -0.33%) usable containers have begun to decline, and by October the usable index of 40-foot containers has fallen by half, and 20-foot containers have also been in short supply.
Strong Asian exports become an important driving force for recovery
Looking at the whole year, the geographical imbalance of the shortage of containers is more significant, which is directly related to the timing of the outbreak.
According to data provided by the United Nations Conference on Trade and Development (UNCTAD), in mid-March, the number of global container ship arrivals began to fall below the level of 2019 and did not start to recover until the third week of June. This timetable basically coincides with the World Health Organization’s listing of the new crown pneumonia as a pandemic and the deteriorating epidemic in Europe and the United States. On the other hand, the number of container ship arrivals at Chinese ports has gradually recovered since June, which is also in line with China’s The lock release time corresponds to that.
In terms of absolute volume comparison, most regions started to recover from the third quarter, but globally, the port container ship berthing volume in early August was still 3% lower than the same period last year, and North America and Europe were 16.3% lower than the same period last year. And 13.2%. In contrast, the number of port calls in China (including Hong Kong) has exceeded the level of last year, an increase of 4.1%.
China's shipping import and export took the lead in the recovery. The fundamental factor is that the domestic epidemic prevention and control has achieved major results, and the production side has taken the lead in recovery, effectively making up for the global supply gap caused by the impact of the epidemic, and also supporting the continuous growth of exports.
China Customs statistics show that in the first and second quarters of this year, China’s import and export growth rates were -6.5% and -0.2%, respectively. They were reversed in the third quarter, with a year-on-year growth of 7.5%. The total value of imports and exports reached 8.88 trillion yuan. Stable, the cumulative growth rate turned negative to positive. It is worth noting that due to the changes in lifestyles caused by the epidemic, the export of notebook computers and home appliances has increased; the export of epidemic prevention materials has also risen rapidly. The export of textiles including masks reached 828.78 billion yuan, an increase of 37.5%; medical materials and medicines, The export of medical instruments and equipment increased by 21.8% and 48.2% respectively.
According to information provided by UNCTAD to a reporter from the Securities Times, although China was the first country to be affected by the epidemic, in the first quarter, China’s overseas trade, transportation and exports were not interrupted, so the transportation at Chinese ports remained unobstructed; on the contrary; It was in the second quarter that due to the escalating blockades of various countries, economic activities were restricted, and the transportation of logistics personnel was blocked, leading to a sharp drop in imports from various countries. At this time, the impact on port operations increased significantly. Subsequently, the epidemic situation in Europe and the United States became more and more serious, and the key figures of the centralized transportation industry also bottomed out in the middle of the year. At the end of May, the World Ports Association pointed out that the number of container ships calling at about 45% worldwide dropped by 5% to 25%, and most of the cancelled ships came from the Far East route.
According to data from Alphaliner, an international shipping consulting and analysis agency, the new crown pneumonia epidemic in the first half of the year has reduced the chartering revenue of large container ships by half. Starting in the third quarter, global shipping capacity has recovered, a year-on-year increase of 2.8%, reaching 123 million TEUs, strong exports from Asia Become an important driving force for recovery.
In terms of the capital market, the share prices of listed companies in the A-share centralized transportation industry have also started in June and have risen significantly in the third quarter. CIMC (14.830, 0.20, 1.37%) and COSCO SHIPPING Holdings (9.680, 0.06, 0.62%) The performance of related listed companies also increased substantially in the third quarter.
Strong demand for containers is expected to continue into the first quarter of next year
Returning to the shipping industry itself, many shipping companies around the world took the initiative to suspend shipping under the influence of the epidemic in the first half of this year.
As the world’s top five airlines, Rolf Habben Jansen, CEO of Hapag-Lloyd, pointed out at the third-quarter performance briefing that in April this year, demand suddenly dropped by 20% and lost 200 million U.S. dollars per month, so it must be suspended to reduce 60% of the cost. He pointed out: "The market at this stage is driven by demand, not by inventory replenishment. The entire market is trying to get empty containers back to where they are needed."
In terms of container freight rates, the Shanghai Export Container Freight Index (SCFI) and China Export Container Freight Index (CCFI) released by the Shanghai Shipping Exchange have set new highs. On November 27, CCFI quoted 1198.72 points, an increase of 4.6% over the previous week; SCFI quoted 2048.27 points, an increase of 109.95 points over the previous week. Under the strong demand, the price of offshore export containers also rose sharply. On November 27, the export container price of Southeast Asia routes was quoted at 995.67 points, an increase of nearly 20% over the previous week.
According to the analysis of China Securities Regulatory Commission, the supply side has not launched large-scale capacity at this stage, while the demand side has continued to grow rapidly, which will become the fundamental reason for the increase in freight rates in the transportation industry. Although the epidemic has led to pessimistic global economic expectations, in fact, the European and American manufacturing PMI index is still in the expansion range driven by policy, which provides economic fundamental support for the increase in freight rates.
However, someone from a shipping company pointed out to a reporter from the Securities Times that in the last 10 to 12 years, the shipping industry has not made any money or even recovered the cost of capital; long-term low-price competition is difficult to promote the healthy development of the industry.
So, can the epidemic promote the long-term recovery of the industry? Most people in the industry are cautious about this.
Rolf Habben Jansen pointed out that the current market is very, very strong, "but it is illogical to think that this situation will continue in the next few years." He expects that the situation will change in the next three or four quarters, and the company needs to be prepared to act quickly.
Container shipping companies and leasing companies also told reporters that the outlook is difficult to predict. Although the strong demand for containers is expected to continue into the first quarter of next year, after the middle of next year, there is still greater uncertainty in the market supply and demand trends. If European and American countries are still under lockdown or vaccine research and development and promotion fall short of expectations, and the macro economy falls into a sustained recession, the good growth momentum of the container transportation industry may not be able to maintain.
In the past few months, due to the severe shortage of available empty containers, the global supply chain has been hit, causing exporters to have a headache. However, new research shows that there is an obvious problem in the container supply chain-empty containers stay in warehouses for an average of 45 days, while in China, the average time for each idle container is more than two months.
The research project of German company FraunhoferCML and Container xChange shows that although China and the United States urgently need containers, the average residence time of empty containers in warehouses is 61-66 days, which is much higher than the global average of 45 days.
The east coast of the United States is usually the location of surplus container equipment (the 40DC container availability value was 0.7 last year), but the container availability rate dropped to 0.43, indicating that there are actually fewer containers than needed.
The researchers said that compared with the Middle East (21 days on average) and Europe (23 days on average), the high standard deviations of 85 days in North America and 129 days in Asia indicate that in many cases, containers stay in warehouses longer than average. Much more.
Container xChange is a platform that connects users and suppliers. The platform stated that the availability of containers across China is still at a record low, while the surge in shipping containers from Asia has overwhelmed US ports, and retailers are eager to put their products on the shelves.
Not only is there a serious shortage of 40-foot tall containers (hc) in the shipping market, but there is also a shortage of 40-foot standard containers, and even 20-foot containers are sometimes in short supply.
The container availability rate of 40HCs is only 0.05 CAx (container availability rate) points, compared with 0.63 in the same period last year.
Asia's container manufacturing industry is working overtime to produce, which accounts for 45% of the global container manufacturing market. China International Marine Containers, the world's largest container manufacturer, announced an increase in its orders.
The factory is stepping up container building, and container orders have been scheduled to the first quarter of next year. Even so, the demand for millions of containers has made it impossible for container manufacturing to quench its thirst. The world's three largest container leasing giants have issued a warning that the shortage of containers will continue for four months.
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.
In order to alleviate the serious imbalance in equipment, shipping companies have adopted an active strategy for exports to Europe and the United States, suspending orders, and preferring to use as many empty containers as possible to fill return ships.
In fact, in order to prevent all but the most expensive goods, European exporters to Asia are required to pay more than $5,000 per 40-foot container to ensure shipment in December. A British freight forwarder said that many shipping companies now refuse to accept export orders before mid-January. "Our customers are willing to pay such a high freight, but due to port congestion, we are still working hard to get the boxes away. Some boxes have been on the dock for more than four weeks and still don't know when they will be shipped."
At the same time, the 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-century problem in the history of the global supply chain, and it is basically unsolvable in the short term.
Affected by the epidemic, more and more countries have been "closed" for the second time, and the ports of many countries have become full of containers. Lack of containers, exploded cabins, dumped containers, jumping into ports, and frantically rising freight rates, foreign traders are under unprecedented pressure.
The latest data shows that European freight rates have increased by 170% year-on-year, and Mediterranean freight rates have increased by 203% year-on-year. In addition, as the U.S. epidemic becomes more severe and air transportation routes are blocked, shipping prices will continue to rise.
With strong shipping demand and a large shortage of containers, shippers are facing soaring container freight and surcharges, but this is just the beginning. The market may become more chaotic in the next month.
Freight rates continue to soar, 170% in Europe and 203% in the Mediterranean
China's export container shipping market continues to be high. The freight rates of many ocean routes increased to varying degrees, and the composite index continued to rise.
On November 27, the Shanghai Export Container Freight Index released by the Shanghai Shipping Exchange was 2048.27 points, an increase of 5.7% over the previous period. With the increase in freight rates and surcharges, Asia-Europe shippers will face more pain.
Last week, the spot freight rate of containers from Asia to Northern Europe rose by 27%, breaking through US$2,000/TEU. The carrier plans to further increase FAK prices in December. The Northern European part of the Shanghai Container Freight Index (SCFI) rose by US$447 to US$2091 per TEU, up 170% year-on-year.
The price of SCFI at Mediterranean ports also surged 23% to US$2,219 per TEU, a 203% increase from 12 months ago.
For shippers in Asia and Europe, this pain of high freight rates shows no sign of ending. In addition to the large surcharges and premium product fees currently charged to ensure on-board equipment and space, freight rates will be further increased next month. .
On the return route, the situation of European exporters can be said to be worse; it is reported that they cannot secure bookings to Asia at any price before January.
Continuation of the high market, the overall freight rate continues to rise
The continued shortage of containers has further exacerbated the lack of capacity in the market, and the freight rates of most routes have increased, which has pushed up the comprehensive index.
On the European route, the capacity continues to be insufficient, and most of the flight booking rates have risen again.
For North American routes, the market supply-demand relationship remained at a relatively good level, and the spot market freight rates were high and stabilized.
On the Persian Gulf, Australia and New Zealand routes, and South America routes, the demand for transportation is strong, and the market freight rates continue to rise, rising by 8.4%, 0.6% and 2.5% respectively in this period.
European routes have strong transport demand. The repeated epidemics in Europe have stimulated local import demand, and the market volume has remained high. The tightness of airline capacity is still increasing, and the contradiction between supply and demand has not been alleviated. Last week, the average space utilization rate of ships in Shanghai Port basically remained at the full level. Affected by this, most airlines will raise their freight rates at the beginning of next month, and the spot market freight rates will rise sharply.
On North American routes , the new crown epidemic in the United States is still severe. The cumulative number of confirmed cases and the number of new cases in a single day are still top of the list. The severe epidemic hinders the unpacking and transshipment of materials. The market capacity is relatively stable, but the market capacity is limited by the ever-increasing shortage of containers, the upside is limited, and the supply and demand conditions remain unchanged. Last week, the average space utilization rate of ships on the US West and East US routes at Shanghai Port was still close to full capacity. The route freight rate remained stable, and the spot market booking price was basically the same as the previous period.
For the Persian Gulf route , the market performance is generally stable, demand remains stable, market capacity is controlled within a relatively reasonable range, and the relationship between supply and demand remains balanced. Last week, the utilization rate of the shipping space of Shanghai Port remained above 95%, and individual flights were fully loaded. Most commercial airlines maintained their freight rates unchanged, and a few adjusted slightly, and the spot market freight rates rose slightly.
For Australia and New Zealand routes , the destination market is in the peak transportation season, transportation demand is rising steadily, and the relationship between supply and demand remains good. Last week, the average space utilization rate of ships in Shanghai Port remained above 95%, and most flights were fully loaded. Most airlines have maintained their booking prices at the previous period, but some have slightly increased, and the spot market freight rates have increased.
For South American routes , South American countries have insufficient capacity due to the epidemic, relying on imports for a large number of materials, and transportation demand continues to run at a high level. In this period, the average space utilization rate of ships in Shanghai Port was close to the full-load level. Under these fundamentals, most airlines increased their booking prices towards the beginning of the month, and the spot market freight rates increased.
Major shipping companies will issue another notice of price increases in 2021!
▍Maersk charges a peak season surcharge from the Far East to Europe
Maersk announced that it has imposed a new peak season surcharge (PSS) in Europe and East Asia from December to next year.
Suitable for refrigerated goods from the Far East to Northern and Southern European countries. The surcharge will be $1000/20' reefer container, $1500/40' reefer container, and will take effect on December 15, Taiwan PSS will take effect on January 1, 2021.
Far East to Northern Europe
Far East to North and South Europe
The Maersk 2M Alliance partner Mediterranean Shipping Company (MSC) will use the following various (FAK) rates from Europe to Canada and Mexico.
• Carrier Security Check Fee (CSF): US$11 per container
• Emergency Fuel Surcharge (EBS) (when applicable): US$500 per refrigerator, US$100/TEU per dry container
In addition, MSC has made the following rate adjustments from December 1, 2020 until further notice, but not more than December 31, 2020.
▍ CMA CGM
CMA CGM, the world's third largest container shipping company, has started the new year and will introduce the latest FAK rates from Northern Europe to Canada, the east coast of Mexico, the east and west coasts of the United States and the Gulf of Mexico.
• Cargo: dry containers, reefer containers, tank containers and special equipment
• Cargo: dry containers, reefer containers, tank containers and special equipment
• Cargo: all types
• USEC, US Gulf and USWC include New York, Norfolk, Savannah, Charleston, Houston, Miami, New Orleans and Oakland.
From January 1, CMA CGM will also implement the following FAK rates for dry containers, reefer containers, open containers, pallets and shipper-owned containers (SOC).
▍Hapao features GRI rates from East Asia to the United States and Canada
Effective date: January 1, 2021.
This increase applies to all dry containers, reefer containers, non-working reefer containers, tank containers, frame containers and open top containers.
East Asia to North America (United States and Canada):
USD 960 for all 20' container types
USD 1,200 for all 40' container types
East Asia includes countries/regions in Japan, South Korea, China/Taiwan/Hong Kong/Macau, Vietnam, Laos, Cambodia, Thailand, Myanmar, Malaysia, Singapore, Brunei, Indonesia, the Philippines and Russia’s Pacific Rim provinces.
In addition, Hapag-Lloyd also released new (GRI) rates for all dry containers, reefer containers, non-operating reefer containers, storage tanks, frame containers and open top containers from South Asia and Northeast Asia to Australia , Effective from January 1st.
Southeast Asia to Australia
• US $ 150/20'
• US $ 300/40'
Northeast Asia to Australia
• US $ 300/20'
• US $ 600/40'
Southeast Asia includes Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam, while Northeast Asia includes South Korea, China, Hong Kong, Macau, and Taiwan.
According to current market conditions, Hapag-Lloyd will increase the GRI rate for all cargo and all container types from East Asia to the East Coast of South America from December 7, 2020, to USD 550 per container.
Hapag-Lloyd announced the rates for all 20' and 40' (high container) goods in the westbound trade from East Asia (including Japan) to Northern Europe and the Mediterranean. The collection will start on December 15, 2020, and will be collected until further notice. Various cargoes (FAK) subject to marine fuel recovery (MFR):
Recently, container freight has soared! The number of empty ships in the market has drastically reduced. In order to preserve space, container shipping companies have started to "grab ships" in the leasing market.
Under such circumstances, Mediterranean Shipping MSC, the world's second-largest container shipping company, even started the direct ship purchase model and purchased two container ships again. It is worth mentioning that this is the 11th ship purchased by the company in a short period of time.
Alphaliner said that the large container ships currently available are insufficient, and most shipping companies have set new records for daily rent. It is particularly noteworthy that even the classic Panamax vessel of 4,000-5,300 TEU, which has suffered "years of suffering", has now risen to an incredible level, which was unimaginable a few months ago.
Driven by strong market demand, container shipping companies have begun to find ways to mobilize all available container ships.
Industry insiders pointed out that the global container shipping market is reappearing in the situation of "a ship is hard to find and a box is hard to find". The mainstream shipping companies have booked space until late December, and it is predicted that high freight rates will continue until around the Spring Festival. High freight rates and high volumes will drive the explosive growth of shipping companies in the fourth quarter.
The "biggest" title changes hands?
Recently, MSC has successively sold and purchased multiple container ships. It is imaginative: Is the title of the world's largest container shipping company changing?
In addition to the two new container ships purchased by MSC as mentioned above, MSC also recently purchased another larger 5,642 TEU Panamax container ship Granville Bridge (built in 2006) from Japanese owner Doun Kisen. ), and neither party has announced the selling price.
It is worth mentioning that the sister ship of Granville Bridge, Greenville Bridge, was also sold by Doun Kisen to MSC earlier this month, with a disclosed price of US$14 million.
At the same time as Greenville Bridge, MSC also purchased another 2510TEU feeder container vessel named Bomar Hermes.
At the end of last month, MSC also spent US$158 million to purchase six large container ships of 7,500-8500TEU from the German shipowner company.
Among them, MSC paid US$114 million for 4 ships of 8,200TEU-8,500TEU. These 4 ships were 8,200TEU ER Tianping and R Tianshan and 8,500TEU ER Tokyo and ER Texas. The above 4 ships Both were built in 2006.
And the 7,849TEU ER Vancouver built in 2003 and the ER Yokohama built in 2004, packaged for $44 million.
Two days before this, MSC also purchased another Panamax container ship called Baltic East from South Korea's Changjin Merchant Marine for US$10 million.
In other words, MSC "buy" 11 ships in more than 20 days.
In addition, industry insiders said that MSC is also very likely to sign a series of large orders for 23,000 teu container ships recently.
In contrast, Maersk, the world's largest shipping company, is very calm. Recently, Maersk released its financial report for the third quarter of this year. The company’s CEO Shi Suoren added when introducing the company’s third-quarter performance report that Maersk currently has no plans to build 20,000+ TEU ships. The company only stated that some of the 10,000 TEU to 15,000 TEU ships are aging and need to be replaced, because being the original owner is more cost-effective than chartering. The company will maintain the current fleet capacity of about 4 million TEUs.
Shi Suoren said, "We are very aware of the technical risks of currently ordering ships," he added.
Analysts from Copenhagen-based sea intelligence pointed out in a report released recently that MSC may soon replace Maersk and become the world's largest shipping company.
According to the latest data from Alphaliner, the current container ship capacity of Mediterranean Shipping is 3,855,684 TEU, and the company has 5 new large ships waiting for delivery. The total capacity of these 5 new ships is 115,000 TEU. After all ships are delivered, MSC’s The total capacity will reach 3970684TEU.
Maersk’s current operating capacity is 4094302 TEU, order capacity is 46140 TEU, and the total capacity including new ship orders is 4140442 TEU.
Consolidation market is hot
The price of the container shipping market has continued to run at a high level recently. On November 13, the latest Shanghai Export Containerized Freight Index (SCFI) released by the Shanghai Shipping Exchange was 1857.33 points, an increase of 11.6% over the previous period. The SCFI index has hit a new high since the 2008 financial crisis.
Zhang Yongfeng, director of the International Shipping Research Institute of Shanghai International Shipping Research Center, analyzed to a reporter from China Securities News that the recent epidemic in Europe and the United States has rebounded sharply. Import demand for daily necessities is strong, market volume is rising, container supply is tight, and the spot market freight rate The sharp increase drove the comprehensive freight index to rise.
"November is generally the traditional off-season for container shipping. This year's market conditions have far exceeded expectations. At present, the container shipping market has relatively abundant cargo and higher freight rates, continuing the pre-hot trend." Zhang Yongfeng said.
Data from the China Ports Association show that my country's foreign trade imports and exports have continued to improve recently, especially exports have further accelerated. In early November, the container throughput of the eight major hub ports increased by 13.1% year-on-year, an increase of 6 percentage points from the previous period. The foreign trade container throughput of the eight hub ports increased by 11.5% year-on-year, and the domestic trade increased by 18.3% year-on-year, both significantly faster than the previous period. In terms of subregions, the Yangtze River Delta and Pearl River Delta regions have seen strong growth in foreign trade business, with Shanghai, Ningbo, Guangzhou and Shenzhen growing at over 10%. Among them, the growth rate of Ningbo Zhoushan Port reached 33%.
With strong demand in the container shipping market, international shipping freight prices have continued to rise since June this year, and shipping prices on European routes, Persian Gulf routes, and South American routes have all increased significantly. At the same time, the domestic export container freight index is also rising sharply.
Han Jun, chief analyst of CITIC Construction Investment Transportation, believes that from the current situation, most shipping companies have already booked the space in late December. On November 22, major routes such as the European route will still see a rise in freight rates. According to information from major liner companies, freight rates will remain at a high level before the Spring Festival. During the Spring Festival next year, the shipping company will implement the suspension plan as usual. The maintenance of freight rates at a high level after March is a high probability event.
Zhang Yongfeng believes that the reason for the recent boom in the shipping market is the result of multiple factors. On the one hand, due to the impact of the global epidemic, demand was suppressed in the first half of the year, and many businesses had the need to replenish inventory; on the other hand, a large number of epidemic prevention materials were exported, and the demand for home shopping in overseas markets increased. In addition, the poor turnover of shipping containers further pushed up freight rates.
In a recent survey conducted by investors, CIMC said: “Currently, our company’s container orders have been scheduled to around the Spring Festival next year. The demand in the container market has increased significantly recently. The reasons are that first, affected by the epidemic, exported containers are scattered all over the world. The return is not smooth; second, foreign governments have introduced financial stimulus such as the epidemic relief plan, which has led to super strong performance on the demand side (such as living and office supplies) in the short term, and the housing economy is booming. It is currently judged that the “lack of boxes” situation will continue for at least some time. But the whole year of next year is not clear."
CITIC Construction Investment Research Report believes that the fundamental reason is the continuous and rapid growth of the demand side. According to data from the Container Trade Statistics Corporation (CTS), the growth rate of global container shipping trade volume remained flat in July 2020, and cargo volume accelerated in August and September. The volume of cargo in September increased by nearly 8% year-on-year. Looking at the year-on-year growth rate of the east-west trunk routes, the demand on the two major routes continued to expand, and the US route even expanded to a growth rate of more than 20%.
The research report pointed out that in the medium term, the replenishment of inventory in the US retail and wholesale industry has not yet ended, and the inventory cycle will last for at least half a year, laying the foundation for continuous improvement in demand. The achievement of RCEP can significantly reduce tariffs and non-tariff trade barriers, further strengthen the position of the manufacturing center in the Far East, and lay the foundation for the growth of regional maritime trade. In addition, from the supply side, the proportion of shipbuilding orders held is at the lowest level in history. Even considering the impact of new shipbuilding, the delivery period will be after the second half of 2023, and there is no basis for large-scale launch of capacity.
"It is still hard to say that the shipping industry has recovered in an all-round way. Overall, the global epidemic is a bad factor for the shipping industry. The epidemic has changed the cycle of cargo shipments, and traditional shipping seasonal characteristics are not so obvious." Zhang Yongfeng said.
Consolidation company makes a big profit
In the third quarter just past, the container shipping market experienced a shortage of containers and skyrocketing ocean freight. At the same time, all liner companies continue to implement strict capacity management and cost control. In this context, liner companies’ performance has increased significantly.
Despite the decline in cargo volume, through combing the performance of various liner companies, in the third quarter of 2020, the revenue of 10 major liner companies in the world is still higher than the same period last year. All 10 liner companies achieved profits in the third quarter, with a total profit of 3.412 billion U.S. dollars, which was less than 800 million U.S. dollars in the same period last year, which was 4.27 times the same period last year.
Among them, Maersk has the highest profit, reaching 1.043 billion US dollars, and it is also the only liner company with a profit of 1 billion. Evergreen Shipping's profit increased the most, with a year-on-year increase of nearly 60 times.
In addition, there are three liner companies that are particularly interesting.
Among them, Star Shipping's performance in the third quarter increased by 28 times. Who would have thought that this company was once on the verge of bankruptcy. More importantly, Star Shipping has seized this opportunity in the e-commerce market and opened multiple e-commerce routes this year, driving a substantial increase in performance.
In addition, Yangming Shipping ended its long-term loss and achieved quarterly profit for the first time. But at the end of September just before the announcement of the results, Yangming Shipping announced the retirement of its former chairman Xie Zhijian. But for this achievement, old coach Xie Zhijian contributed a lot.
Finally, HMM stabilized its profitability. HMM once ended 21 consecutive quarters of losses in the second quarter of this year. At that time, the industry had different views on whether it could continue to make profits in the third quarter. The market situation has created opportunities for HMM.
On the whole, with operating income basically remaining stable, the major liner companies have achieved profits several times or even dozens of times the same period last year, which can be said to have made a lot of money.
Looking ahead to next year, the analysis agency Sea-Intelligence also changed its previous forecast, predicting that the pre-interest and tax (EBIT) of the container shipping industry in 2020 will reach 14.2 billion US dollars. In April of this year, the agency predicted that the impact of the epidemic might cost the entire shipping industry US$23 billion.
Sea-Intelligence said: "There is no doubt that the performance of liner companies in 2020 will not only far exceed last year, but even better than the level of the past 8 years."
This forecast conclusion is based on the increase in freight and freight volume.
Data from Container Trades Statistics shows that in the first nine months of 2020, global container shipping volumes have fallen by 3.4%. However, the cargo volume situation has reversed sharply in recent months. In September this year, the global container shipping volume has increased by 6.9%.
Based on this, Sea-Intelligence believes: "If this growth is maintained in the fourth quarter, the global container shipping volume will only fall by 0.8% in 2020."
After the end of the third quarter, some large liner companies such as Maersk and Hapag-Lloyd also raised their full-year profit expectations. CMA CGM also stated that the market will remain strong for the rest of this year.
Although most liner companies are still more cautious about the market prospects and believe that next year's situation is unpredictable, Drewry believes that despite the second wave of the epidemic, they have optimistic expectations for liner companies' earnings in 2021.
