The analysis of the US retail supply chain experts pointed out that after setting a new record in the fall of this fall, the US's ocean container imports continued to maintain strong growth thanks to retailers' replenishment of inventories and large orders from e-commerce platforms.
Jonathan Gold, vice president of supply chain and customs policy at the National Federation of Retailers (NRF), said that the new crown pneumonia epidemic has made 2020 one of the most difficult years in the history of the supply chain industry, but fortunately, the supply chain has experienced Lived the test of life and death. Jonathan said: "So far, holiday products are abundant, and the experience of the epidemic in 2020 has taught us many experiences and lessons."
Ben Hackett, the founder of the consulting firm Associates, emphasized that imports have experienced a roller coaster-like market. The retail inventory-to-sales ratio soared to 1.68 in April and dropped to 1.22 in June, and has maintained this level ever since.
According to the "Global Port Tracking Monthly Report", the US ocean container imports in October were 2.21 million TEU. This figure is an increase of 17.6% compared to the same period last year and an increase of 5.2% from the 2.1 million TEU in September. This is the highest monthly record since the Federation of American Retailers started tracking container imports in 2002.
U.S. sea container imports will increase by 2.4% year-on-year in January next year
The Federation of American Retailers predicts that in January 2021, the import volume of seaborne containers in the United States was 1.86 million TEU, an increase of 2.4% year-on-year; in February it was 1.55 million TEU, an increase of 2.6% year-on-year; in March it was 1.62 million TEU, an increase of 17.8 year-on-year %, it was 1.74 million TEU in April, a year-on-year increase of 8.3%.
As U.S. consumption continues to recover and retail sales have rebounded strongly, the federation predicts that November and December holiday sales will increase by 3.6%-5.2%, exceeding the total in 2019, with sales between 755.3 billion and 766.7 billion US dollars.
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.
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%.
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.
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.
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.
"Yantian Port (6.320, -0.11, -1.71%) processes a TEU in an average of 2.4 seconds, and a ship departs to the United States every 4 hours. This year, the port throughput will set a record for the port in the past 20 years."
Lin Qingwen, managing director of Yantian International Container Terminal Co., Ltd., introduced that one out of every four containers imported by the United States from China comes from Yantian Port in Shenzhen, which has set a global single terminal throughput record for two consecutive months this year.
As the world's largest container port, Shanghai Port also set a monthly historical record of container throughput in July and October this year. According to data released by the China Ports Association, in October, the container throughput of China's eight major hub ports increased by 11.1% year-on-year, and the growth rate hit a new high this year.
At the same time, an unprecedented "container shortage" is sweeping across the country and has become an "immediate emergency" for foreign traders. Behind this, has China's foreign trade fully recovered?
From the macro data, the answer seems to be yes.
According to data released by the General Administration of Customs on December 7, China's foreign trade imports and exports in November were US$460.72 billion, an increase of 13.6%. Among them, exports were US$268.07 billion, an increase of 21.1%; imports were US$192.65 billion, an increase of 4.5%. Both the total value of imports and exports and the value of exports in November set a monthly record since the statistics were available in 1979. Excluding seasonal factors, the growth rate of exports in November also set a new high in the past nine years. The scale of China's imports and exports in the first 11 months also hit a record high over the same period in history.
This greatly exceeded expectations at the beginning of the year. At that time, due to the impact of the epidemic, a large number of orders were cancelled, and the foreign trade market was full of grief. However, after entering the second half of the year, the plot quickly reversed: a large number of foreign trade factory orders surged, and news of exploding orders, exploding cabins, lack of cabinets, overtime, and enrollment expansion was endless.
This is because the economic recovery of various countries in the epidemic is not synchronized : China has quickly resumed work and production after the epidemic was controlled, while the epidemic in many other countries has continued to repeat, and there have been signs of accelerated rebound in recent days, and factories in some countries have been forced to stop production. , The production chain is broken, the market supply of these countries can only be solved through imports, and the dependence of the international market on Chinese trade has increased.
In this process, the global manufacturing industry has a tendency to return to China . For example, some foreign trade orders from countries such as India, Bangladesh, and Vietnam are being transferred to China.
On the other hand, the measures taken by countries to stimulate the economy are not the same: Europe and the United States focus more on stimulating the consumer side, while China pays more attention to the resumption of work and production on the supply side and the integrity of the industrial chain.
Therefore, the income level of consumers in European and American countries has not dropped significantly. Affected by the epidemic, although overseas consumers have drastically reduced their consumption of services such as tourism, they have increased their physical consumption in renovating houses, replacing furniture, and home appliances.
Correspondingly, China's exports of building materials, furniture and home appliances have grown rapidly recently . As the first country to survive the epidemic and resume normal production, with a complete domestic supply chain and a huge manufacturing scale, China quickly responded to overseas consumer demand and brought about a surge in exports.
In addition, foreign trade exports, which set historical records recently, also have traditional seasonal factors. Near Christmas and New Year, foreign centralized purchases need to be stocked in advance. This is the peak season for Chinese exports, and this year is no exception.
It is worth noting that the epidemic is profoundly reconstructing the product structure and trade mode structure of China's foreign trade.
As Bai Ming, deputy director of the International Market Research Institute of the Ministry of Commerce, said, the recovery of China's foreign trade after the epidemic is not the overall recovery of the entire industry, but there is obvious industry differentiation.
Among them, the export of anti-epidemic materials such as masks and ventilators, household products such as furniture, home appliances, fitness equipment, and electronic products related to online transformation performed the most strongly.
According to statistics from the General Administration of Customs, in the first three quarters of this year, China exported 880.8 billion yuan of "home economy" commodities such as notebook computers, tablet computers, and home appliances, an increase of 17.8%, driving a 1.1% increase in exports. China’s exports of textiles, medical equipment, and medicines, including masks, totaled 1.04 trillion yuan, an increase of 36.5%, driving an export increase of 2.2%.
According to Helen Feng, the business director of Dongguan Jiamu Packaging Materials Co., Ltd., due to the closure of a large number of restaurants, the company that mainly exports packaging boxes suffered a serious setback before April. However, the company quickly adjusted its production line and changed its production protection. Face masks, the latter accounted for 40% of its total exports.
"This year, our foreign trade should be able to reach RMB 80 to 90 million, achieving positive growth, but if we do not export anti-epidemic materials, our traditional business may experience a sharp decline."
Helen Feng pointed out that after the outbreak, the division of foreign trade industries was very obvious. "In Dongguan, factories that used to make clothing, shoes, handbags and other industries are basically closed now; however, factory orders for epidemic prevention materials, furniture, bicycles, and 3D printers have skyrocketed. They Schedule is very busy."
Xie Hua, the person in charge of Zhangjiagang Keen Machinery Co., Ltd., felt the same way. She said that the export orders of many furniture, home appliances and daily necessities in the Yangtze River Delta have grown rapidly, but the company that she works for is mainly engaged in plastic extruders this year. The foreign trade orders are less than half of previous years.
She believes that this is because the epidemic has interrupted the traditional trade process. For example, in the machinery industry, overseas customers need to go to the site to see the equipment before placing orders. This year, customers can't make it through, and orders have naturally declined. "Products such as daily necessities do not require on-site inspections. Many only need a sample, and even transactions can be completed online."
The epidemic has also accelerated the migration of China's foreign trade online . Under the epidemic situation, China's two consecutive Canton Fairs have been held online, and whether it is B2B or B2C, multiple cross-border e-commerce platforms have doubled.
Liu Hua, a sales manager of a daily necessities company in Zhangzhou, believes that an important reason for the intensified "container shortage" is the surge in e-commerce exports.
She said that traditional export logistics demand is basically stable, and the biggest variable is e-commerce exports. “This year a large number of factories have switched to online, which has brought a large market increase. In previous years, factories that could receive 100,000 orders were transferred to It is very likely that 200,000 orders have been received online. Now our company's e-commerce orders account for nearly 80% of the total foreign trade orders. Online orders are much more than expected, but the cabinets on the market have not prepared so many."
The "container shortage" will eventually pass, and the question facing China's foreign trade is how long can such a boom last?
In the short term, the current overseas consumer goods inventories are still low, and the contradiction of insufficient foreign production capacity is still prominent. Due to the base problem, China's fast-growing foreign trade is expected to continue to advance by leaps and bounds, and may set a higher growth rate in the first quarter of next year.
In the medium and long term, China's foreign trade will eventually return to a normal range. The future foreign trade prosperity depends on the strength of external demand on the one hand, foreign currency tightening, employment income and other factors are crucial; on the other hand, it depends on the recovery of the global industrial chain, which is still spreading no matter what. The epidemic is the biggest uncertainty.
For China, the reversal and expansion of foreign trade this year is neither anticipated earlier nor the result of active pursuit. China has not set a specific growth target for foreign trade for many years, and has replaced it with the requirement of "improving quality and efficiency", which is still a long-term goal.
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.
Air cargo has ushered in the traditional peak season again. Not only has the volume of cargo increased sharply, but also the phenomenon of warehouse explosions and queues. The air freight prices of some routes have also increased or even doubled.
Katie Griley, vice president of operations at Griley Air Freight, revealed that the peak season is coming. Even if the cargo arrives at the local airport, it will take 4 to 8 hours for truck drivers to pick up the cargo from Los Angeles International Airport.
In this regard, the International Air Cargo Association (IATA) stated that during the surge in e-commerce in recent months, the continuous shortage of capacity due to the lack of passenger aircraft services will cause a particularly serious blow to the air cargo industry.
So what is the current domestic situation?
An executive vice president of international freight in Shanghai said that it is now in the traditional peak season for air transportation, and the recent traffic jams and queues in the unloading area of the airport logistics storage area are very serious. The liquidation should start in mid-October, and not only the volume of cargo has increased significantly, but the freight prices of major routes have also increased a lot.
In fact, not only the domestic but also the international air cargo market has been in a high boom this year. The freight rate has also been at a high level for a long time. Some routes have also risen to the highest prices in history.
2. The reason for the explosion of air freight and the skyrocketing freight?
According to a report from CCTV Finance, Dexun Group East China Managing Director Fu Keqiang said that from the second quarter to the present, the four main products that have contributed to the growth of air freight are electronic products, e-commerce channel products, personal protective equipment and auto parts. , These four products accounted for the main growth factors.
Zhao Chao, a senior analyst in the transportation industry of Changjiang Securities, said that on the one hand, the shortage of transportation capacity is difficult to reverse in the short term. On the other hand, when consumption in Europe and the United States is the most prosperous, such as Christmas and other shopping seasons, the overall freight rate should still remain. The high position will continue to rise.
So how to explain to customers in English?
1. Peak season demand soars
Paul Molinaro, head of WHO's business support and logistics operations, told Reuters that a series of factors have driven prices up, including the higher-than-usual increase in e-commerce before Christmas.
According to the U.S. Department of Commerce, e-commerce sales in the United States in the third quarter increased by 37% compared with the same period in 2019. According to data collected by Buy Shares, online shopping spending during the Thanksgiving weekend (including Black Friday and Cyber Monday) increased by 20% to $29.6 billion.
According to data sent to the Global Times by cross-border e-commerce platform DHgate, shipments from China to the US accounted for approximately 68% of the platform's total sales in September. Peak season for Christmas decoration transportation. The best sellers are Santa sack, solar LED string lights, Christmas snowman, artificial flowers and Christmas masks.
We can tell our customers like this:
Airline body IATA’s chief economist Brian Pearce said that Christmas demand “exaggerates the problem” of a surge in demand for airfreight.
Airline International Air Transport Association (IATA) chief economist Brian Pearce (Brian Pearce) said that the demand for Christmas prompted the explosion of international air cargo.
The COVID-19 pandemic's impact on production in countries around the world and the nearing of Christmas, a peak season for export of Chinese products to Europe and the United States, were part of the reasons for the surge in demand for airfreight.
Due to the impact of the epidemic on the production of countries around the world and the approach of Christmas, which is the peak season for China’s exports to Europe and the United States, this is also part of the reason for the explosion of air cargo.
2. Insufficient capacity
Data from the global air cargo market showed that air cargo demand continued to grow in October, but the growth rate was lower than the previous month.
IATA Director-General and CEO Alexandre de Juniac (Alexandre de Juniac) pointed out that air cargo demand is picking up, and we believe this trend will continue into the fourth quarter.
We can tell our customers like this:
Alexandre de Juniac, IATA’s director general and chief executive, notes that the biggest problem for air cargo is the lack of capacity, as much of the passenger fleet remains grounded.That will likely be exaggerated with shoppers relying on e-commerce – 80 per cent of which is delivered by air.
IATA Director-General and CEO Alexander de Juniac said: The biggest problem with air cargo is insufficient capacity, because most passenger planes are still grounded. If shoppers continue to shop online, it is no exaggeration to say that 80% of them are delivered by air.
So, the capacity crunch from the grounded aircraft will hit particularly hard in the closing months of 2020 which were part of the reasons for the surge in demand for airfreight.
Therefore, in the months before 2020, the production capacity of grounded aircraft will be particularly severe, which is also part of the reason for the explosion of air cargo.
3. Soaring freight
It is reported that due to the impact of the epidemic, the United States announced restrictions on flights from Asia and Europe, which affected the capacity of transportation and hauling of goods. Global supply chain disruptions and restrictions have forced operators to rely on commercial aircraft, which has led to a sharp increase in the rates of all-cargo airlines.
According to a report from the International Air Transport Association (IATA), the highly anticipated releases of electronic products such as the iPhone and Play Station 5 are traditionally shipped by air during Christmas and Black Friday.
The increase in air freight demand before the holidays caused rates to soar again. From October 12th to November 9th, freight rates between China/Hong Kong and the United States increased by nearly 46%, reaching US$7.40 per kilogram, more than double the same period last year.
American Airlines President Robert Isom said last month: “From August to September alone, we doubled our cargo volume and operated 1,900 flights, serving 32 destinations in the third quarter. Provide services locally."
We can tell our customers like this:
A surge in demand for airfreight during the pandemic, coupled with peak season needs, has pushed UPS/Fedex/DHL to once again raise fees on goods flowing from China to the foreign countries.
The surge in demand for air transportation during the epidemic, coupled with peak season demand, prompted UPS/Fedex/DHL, etc. to once again increase the charges for goods from mainland China to other countries.
With holiday season upon us, shippers are yet again forced to shell out higher prices. Decreased capacity and higher rates have been a staple this year, causing fluctuating prices in air cargo especially, and in order to secure space, shippers have paid higher rates and additional surcharges.
With the advent of the holidays, shippers are again forced to pay higher prices. Declining capacity and rising tariffs are the main things this year, especially because of the fluctuations in air cargo prices. In order to ensure space, the shipper paid higher rates and surcharges.
The International Air Transport Association Brian Pearce said at a recent press conference that all signs indicate that air cargo volumes will continue to grow for the rest of the year. And manufacturers (the main driving force of air transport) are particularly bullish. In response to this situation, what are the current measures taken by all parties?
3. What are the measures taken by all parties?
domestic
Faced with the huge increase in demand for international air cargo, airlines have also increased the delivery of international cargo flights . According to statistics, China's international cargo flights increased substantially at the end of October, reaching about 2.3 times the same period last year. All airlines have invested more cargo capacity, and the frequency of both all-cargo aircraft and "passenger-to-cargo" aircraft has increased significantly.
Wang Jianmin, deputy general manager of Eastern Airlines Logistics Co., Ltd., said that the number of "passenger-to-cargo" flights increased significantly in October and November, and there were more than 100 more flights in October compared with September. In November, the number of "passenger-to-cargo" flights increased to 1,000. Around, a substantial increase from October. In November, the utilization rate of freighters reached a peak of 14 hours per day, and some exceeded 14 hours.
foreign
Lu Dongmei, China's chief representative of Lufthansa, said that in order to meet the growing demand for cargo capacity, Lufthansa has turned passenger planes into cargo planes and filled their abdominal cavity with cargo that can fly around the world. In addition to the all-cargo operations 20 cargo flights a week, but China also conducted five weekly flights on passenger aircraft turnaround.
Canadian officials said that due to the impact of the epidemic, its e-commerce market is growing, and there is a chronic shortage of cargo aircraft. Air Canada plans to convert the Boeing 767, which has recently withdrawn from passenger service, to be able to carry large containers and pallets on the main deck. The premise is that the carrier needs to reach an agreement with the pilot.
DHL Express said that due to the grounding of most passenger aircraft, the abdominal muscle capacity is insufficient, although there are plans to provide air charter services to serve certain major markets. But this year still adds six aircraft, which is to overcome the air cargo capacity restrictions caused during the epidemic.
Finally, remind foreign trade friends who are shipping by air in the near future to communicate with customers on capacity in a timely manner, and to be cautious in quoting (each airline may adjust prices frequently) to avoid unnecessary losses.
In recent months, the container market has experienced extreme conditions. High freight rates and container shortages have plagued the market and will continue for some time. In addition to the short plug of the reefer, the import and export of the reefer will also be a new challenge.
Large companies and logistics companies that need to ship refrigerated goods must be prepared, and shipping companies have announced that they will stop receiving freezers.
It is reported that the shipping company Hapag-Lloyd announced that it will suspend all 40' freezer bookings in Germany, Austria, Switzerland, Hungary and the Czech Republic until the end of December 2020.
"Our goal is to support all confirmed export orders, but reservations may be cancelled for individual cases. We will try our best to provide all customers with the best service, but we expect that the situation will remain very tense in the coming weeks." Herb Roth wrote in a statement.
"This once again shows that the market is facing severe container equipment challenges. This is a prominent problem that affects the supply chain in many places, not just the supply chain in Asia." Shipping analyst and chief executive of Sea-Intelligence Consulting Officer Lars Jensen said.
In addition to Europe, Hapag-Lloyd announced on December 3 that the port was congested due to stricter customs inspection 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.
In view of the above situation, customers are kindly requested to provide written confirmation as soon as possible. You can have the following options:
(1) If circumstances permit, accept delivery at the current port of discharge;
(2) Transfer your refrigerated container to another port/destination;
(3) Transport your refrigerated container back to the port of departure;
(4) If there is no instruction from the customer, Hapag-Lloyd reserves the right to make all necessary arrangements.
Please note that for any of the above options, all additional costs, risks and liabilities related to storage or transportation of the goods after unloading will be borne by the owner of the goods.
At the same time, Hapag-Lloyd also announced that it will temporarily stop receiving orders for imported reefer containers from Busan, South Korea to Tianjin, China , with immediate effect.
In addition, my country has recently increased its inspection of imported refrigerated goods, making the inspection of refrigerated goods more stringent and time-consuming. Ports are facing problems such as slow pickup of containers and port congestion.
Ocean Network ONE stated in the announcement that it will suspend the delivery of refrigerated containers to Huangpu Port from November 26. In addition to the latest announcement of ONE, Xiamen, Fuzhou and Fuqing have also suspended receiving imported refrigerated containers.
ONE stated that due to the stricter inspection and disinfection requirements imposed by customs on refrigerated containers imported into Xiamen/Fuzhou/Fuqing, the delivery of freezer containers has been slow and is facing congestion.
In view of this situation, from the date of shipment on December 8, 2020, ONE will stop accepting all orders for refrigerated goods destined for Fuzhou and Fuqing, China , until further notice.
Starting from the loading date on December 9, 2020, ONE will stop accepting all reservations for refrigerated cargo to Xiamen, China or for transshipment via Xiamen , until further notice.
▲ONE announcement
For containers in transit, ONE strongly recommends that customers consider changing the destination to another port, especially for time-sensitive goods, such as fresh and refrigerated goods.
For refrigerated containers that have been transshipped to Xiamen, or refrigerated containers that have been detained at the transshipment port for further transportation to Xiamen, please note that all related expenses will be borne by the consignee and paid upon delivery.
For containers that have been transshipped to Fuzhou/Fuqing or detained at a transit port, once the Fuzhou/Fuqing feeder space is available, a specific surcharge will be charged at the time of loading.
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.
