/ By TJ China Freight / Shipping

The shipping industry is facing the hot market, “crazy boxes” one price a day!

The shipping industry in 2020 can be said to be half winter and half summer.

Affected by the epidemic, China's exports declined in the first half of the year, and the shipping industry was cold and "overwintering" ahead of schedule. In the second half of the year, the neglected shipping industry directly entered the "midsummer." As the epidemic situation in China stabilizes and the economy recovers steadily, goods from all countries are transferred from Chinese ports. For a time, China's shipping industry is showing a busy scene.

“It’s too difficult to order containers now!” A reporter from the Securities Daily could see vehicles transporting containers coming and going at the Shanghai port. A foreign trade official who did not want to be named told the reporter: “At present, I want to order a container. The price can be said to be one price per day. Not only that, even if the container is booked, I still have to worry about the availability of the cabin."

 

The shipping industry is facing the hot market, "crazy boxes" one price a day!

 

 

"Shanghai SIPG, Ningbo, and Shenzhen are all major ports in the world. In 2018 and 2019, the container throughput of Shanghai Port was ranked first. Recently, the container shipping market is very hot, and many boxes cannot be returned after they go out." People from listed companies commented on the reporter of "Securities Daily".

In this regard, Liu Wang, chairman of Shanghai Tianhui International Logistics Co., Ltd., told reporters: “The price of container transportation has been rising. Because shipping companies have fewer ships, they often suspend voyages, and the lack of boxes is common, even if the price increases. It cannot fundamentally solve the problem of missing boxes."

• One price a day, "boxes" are crazy

"The most exaggerated time in the past 10 years." Speaking of the current shipping industry, Ms. Xie, who is engaged in the foreign trade industry, told a reporter from the Securities Daily. Ms. Xie is mainly responsible for the freight of Guangzhou Nansha Port and Shenzhen Port. She told reporters that taking a 40-foot container as an example, the highest sea freight to the Middle East at this time last year was about US$3,000. It costs almost US$5,000 now. Last year, it was US$2,800 to US$3,200 to Europe, and now it is US$6,000 to US$7,000. This year, the freight is almost twice the same period last year.

By the end of the year, the lack of positions became a true portrayal of the operation industry.

“Nowadays, there is a shortage of containers and high freight rates. The supply exceeds demand. During the epidemic, there was a large backlog of foreign containers that could not be arranged for delivery, and no one carried the goods. Almost all customers were looting containers. Under current market conditions, there are few freight forwarders. When looking for new customers, they are basically priority old customers.” Ms. Xie told reporters that the new year is approaching, and major suppliers are fully shipping. It is expected that the shortage of containers will continue.

 

The shipping industry is facing the hot market, "crazy boxes" one price a day!

 

 

"First of all you have to have a position, then you have to line up the truck to get the container, and finally you have to wait for the port to open before you can enter the port. Every day, you have to go through five hurdles, and you have to face customer soul torture. It's late, can't you figure it out?" A shipping forwarder complained about the tightness of the current export containers.

Liu Wang revealed to the "Securities Daily" reporter: "Many forwarders who have no boxes sometimes look for scalpers. Now forwarders are looting positions. The positions have to be booked in advance. Many people robbed and reselled them. In the past, they did not lose their shipping fees. Now that the shipping companies are recovering their losses, the shipping companies are about to usher in a wave of market conditions this year. After the merger and reorganization last year, it is estimated that all the money lost in the past will be made back this year."

Liu Wang said: “In the past Christmas and the Spring Festival, there will be a wave of liquidation market, this year is particularly fierce because of the epidemic. South American container boxes were the lowest in history at 50 US dollars a small container, and now basically it costs more than 5,000 US dollars, and a large box 10,000. U.S. dollars, if $5,000 this week is too expensive for you, you may not be able to order $6,000 next week, basically one price a week."

In fact, the current container price has been upgraded to a daily basis. A person in charge of an international logistics company said: “In Qingdao Port, the price of a second-hand 40-foot container in previous years was about US$2,000. On November 27 this year, the price rose to US$2,850; by November 30, the price of a second-hand container rose to US$3,200. ; On December 3, it rose to 3,400 US dollars again, almost one day."

According to data from the freight benchmark company Xeneta, the current average price of short-term market contracts in Asia and Europe for three months or less is 200% higher than a year ago, at $4,831 per 40 feet. But from the same period last year, freight rates across Southeast Asia have increased by an astonishing 390.5%.

The relevant person in charge of COSCO SHIPPING Holdings told reporters: “As the volume of goods continues to rise, the demand for export containers has greatly increased, and the domestic guarantee for container use has become tighter. However, the turnover of overseas empty containers has generally slowed due to the continuous impact of the epidemic situation in various places. Transfer back to China to meet demand."

"The whole industry is looking for boxes everywhere, and some merchants are beginning to hoard boxes to speculate on prices." In the eyes of industry insiders, the current situation of foreign trade companies being difficult to find a box is not only because of the slow operation of containers, but also because of the reduction of some routes. .

"There are few ship lines, and most of the cabinets shipped abroad can't return. This is the root cause of the skyrocketing price of the domestic container transportation market." Liu Wang explained to the reporter: "It's not that foreign cabinets are not coming back. It is the epidemic situation abroad. The impact is that the workers do not go to work and the speed of transportation is relatively slow. Now everyone is sharing the warehouse."

According to Liu Wang, the container ships now and the alliance has been formed since last year. Originally, it used its own ships to transport the goods. Now four or five shipowners or five or six companies form an alliance, and use the same ship. warehouse. "It turns out that there may be several shipping companies arranging several shifts to go to sea in a week. Once we formed an alliance, the shifts decreased in a week. This started last year. Now shipping companies often stop once a week, which objectively leads to a shortage of ships. ."

A person in charge of the Shanghai Maritime Logistics Company introduced to a reporter from the Securities Daily: "At present, the proportion of import and export trade by sea is imbalanced. There are few boxes coming in and many boxes going out . In addition, China has quickly prevented and controlled the epidemic, and overseas orders have continued to surge. , Increasing the pressure on shipping. Overseas, affected by the epidemic, the operation cycle of containers shipped out due to business environment problems has been lengthened, the arrival process has increased, and the operation efficiency has slowed and lengthened the circulation cycle. Due to the early outbreak of the epidemic, major shipping The company has reduced many routes, resulting in uneven distribution of global container volumes."

 

The shipping industry is facing the hot market, "crazy boxes" one price a day!

 

 

The industry believes that with the increase in market demand, the current effective capacity is obviously insufficient.

The relevant person in charge of COSCO Shipping Holdings revealed to the reporter: "As the global epidemic prevention and control has become normalized, global trade has been rapidly repaired since the third quarter of this year, and the demand in the container shipping market has recovered beyond expectations. In order to meet the growth of transportation demand, market capacity has gradually returned to normal. , The idle capacity has dropped rapidly from the record high of more than 2.7 million TEU (international standard unit units) in May this year. At present , there is no airworthy effective capacity to rent in the market. "

In the context of uneven global container deployment, container prices on different routes have also risen at different rates.

"Since November, the price of the U.S. line has increased by about four times compared with the beginning of the year, and the European line has risen to the highest price last year. From the perspective of the distribution of China’s export routes, the U.S. container accounts for 25%, Europe accounts for 25%, and Southeast Asia , Northeast Asia adds up to 50%, the US route is now hard to find a box is the norm, followed by the European route, freight is also very tight. The price of Malaysia route in Southeast Asia has also doubled recently." The person in charge of the aforementioned logistics company added.

Facing the increase in demand for containers, the above-mentioned relevant person in charge of COSCO SHIPPING Holdings stated: “The company will strengthen scientific forecasts for container use, actively coordinate dual-brand superior resources, and make every effort to guarantee the use of containers during peak seasons. On the one hand, internally tap the potential and accelerate overseas heavy container Demolition speed, increase empty container callback domestic and Far East efforts to promote container turnover; on the other hand, close communication with container manufacturers and container leasing companies to seek more container sources. Through two-pronged and multiple measures, to guarantee domestic container use Provide effective assistance and try our best to meet the shipping needs of customers."

In order to meet the development needs of the container market, SIPG has launched a number of effective measures to promote container volume growth in response to the market. At the beginning of this year, the Group launched seven special measures for container growth, through the implementation of preferential international transit loading and unloading fees, extension of the international transit container storage exemption period, and sea-rail intermodal customs clearance container preferential projects. In the first half of the year, the Group established three major container areas: Yangshan, Outer Harbor, and Domestic Trade, striving to achieve overall planning and agglomeration effects.

According to SIPG’s official announcement, in October, each terminal of Shanghai Port set a new record. The monthly throughput of Shengdong Company exceeded 820,000 TEUs for the first time. Among them, 33068 TEUs and 12899.75 TEUs were updated on October 25. Class record; Guandong Company broke through 720,000 TEU, setting a new record again.

• How long can the "shortage of containers" last? What is the future prospect of the shipping industry? 

"The first half of the year was affected by the new crown epidemic. Ports and shipping fields did suffer a relatively large negative impact, so the first half of the year was basically a negative growth state. In the second half of the year, especially after the third quarter, normal operations resumed to a certain extent, plus China The epidemic has been controlled to a certain extent, and most of the economic activities have been resumed first. Therefore, compared with the first half of the year, there is indeed a big sign of a bottoming out." said Liu Dian, a research assistant at the Chongyang Institute of Finance of Renmin University of China.

In the first two months of this year, my country's foreign trade imports and exports dropped significantly. According to China Customs data, from January to February 2020, my country's total import and export value of goods trade was 4.12 trillion yuan, a year-on-year decrease of 9.6%. Among them, exports were 2.04 trillion yuan, down 15.9%; imports were 2.08 trillion yuan, down 2.4%.

Although the current domestic epidemic situation is under control, the global epidemic is breaking out, and exports are still under certain impact.

It can be said that in the first half of this year, people in the shipping industry were mainly pessimistic about my country's export prospects. In the second half of the year, the industry was generally optimistic about the future development of the shipping industry.

The shipping industry is facing the hot market, "crazy boxes" one price a day!

Insiders analyzed to the "Securities Daily" reporter that this round of container freight price increases began in the middle of this year. At that time, after the domestic epidemic was brought under control, foreign countries were greatly affected by the epidemic, and many overseas orders were transferred to the domestic market. When shipping from China, the shipping price began to rise. According to Liu Wang's prediction, this round of price increases will continue until the first quarter of next year.

An unnamed person in charge of maritime logistics said: "As the epidemic stabilizes, this hot market will continue into the first half of next year, or even longer."

"This wave of increase in container shipping prices has driven the adjustment of the entire foreign trade sector, breaking the laws of the past decades in the industry. Not only ocean freight, air freight and land transportation have different levels of influence and changes. The epidemic has accelerated the entire large trade sector. The consolidation and adjustment of the shipping sector will gradually move towards intensive development. Shipping companies have become monopolistic after years of integration and mergers. The aviation sector and the land transport sector are also rapidly integrated, and a new chapter will emerge in the future foreign trade field." People say so.

According to Huang Tianhua, chairman of the China Container Industry Association and vice president of CIMC, predicted that the shortage of containers may continue for about six months . He said: "We have monitored that if there are 500,000 new containers in China normally, they are in a completely healthy state if they are ready for use in the docks or ports, but the current tighter inventory is about 300,000 new containers. I expect it to be possible. In the next three months to six months, this slightly tense balance will continue. This is probably a trend in the current industry."

Although the industry is generally optimistic about the shipping industry, Liu Dian believes that the total global trade volume in 2020 will still drop a certain percentage from the previous year, but from the perspective of the shipping industry, it will definitely be from the third quarter to the fourth quarter. There will be a better market.

Liu Dian said: “Affected by the epidemic in the first half of the year, the uncertainties slowed down in the second half of the year, and the overall trend showed a relatively large rebound. Therefore, from a macro perspective, global international trade has rebounded to a certain extent. China is the first to resume the rebound led by the next."

" At present, the shipping industry is mainly affected by three factors :

Di Yi factor is that the global economy is expected to have a recovery, so after the third quarter, international trade has been warmer, led the field of shipping industry as a whole for the better, whether it is from container or just have some trade from the sea to pick up case .

The second factor is that with the signing of the RCEP agreement, a series of regional economic integration cooperation relations in East Asia and Southeast Asia will improve, which will benefit the import and export trade of China and related countries.

The third factor is that although the epidemic has not been eliminated on a global scale, all countries are in short supply, such as medical supplies, production supplies, and living supplies. China is now the world's largest trade surplus country. Under such circumstances, China's export trade, including part of its import trade, will also get a relatively large rebound in demand, and at the same time promote the rise of a series of shipping-related industry indexes in related fields, including the container shipping index. "Liu Dian said.

/ By TJ China Freight / Shipping

How to choose the container used in sea freight?

Ocean freight has been very developed in the 21st century. How to choose the container used in freight transportation ? The following editor will analyze it.
The emergence of containers is for the safety of the container and the ship, but before packing, it is necessary to know the volume, nature, type, and shape of the goods to choose a suitable container. Of course, some goods cannot be transported, and also The cargo will be damaged due to the wrong container.
As for how to choose the right container for the goods, let's talk about them one by one below.
How to choose the container used in sea freight ?
You can choose sundries containers for valuables and cleaning items; ventilated containers for perishables and dirty goods; refrigerated containers for refrigerated and dangerous goods; livestock (animal) containers for animals and plants; platform containers for bulky items, and bulk The cargo can choose bulk containers.
When we are shipping, it is very important to know how to choose the shipping container, and it is also to ensure the safe arrival of the goods to the destination.

/ By TJ China Freight / Shipping

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

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

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

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

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

Export orders soared, shipping costs soared

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

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

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

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

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

 

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

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

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

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

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

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

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

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

 

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

 

 

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

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

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

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

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

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

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

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

 

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

 

 

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

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

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

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

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

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

 

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

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

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

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

 

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

 

 

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

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

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

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

/ By TJ China Freight / Shipping

The two-way backlog of China-Europe freight trains has stopped loading export goods! Shipping costs soared 5 times!

A China-Europe Express platform company said that since the beginning of this year, the shipment volume of China-Europe Express Express has continued to increase, but the limited port operation capacity, coupled with the impact of border epidemic prevention and control and other factors, has caused a large amount of cargo to be backlogged at the port. "From the second half of this year, At the beginning, some ports experienced serious congestion. With the increase in freight demand at the end of the year, congestion has become more serious recently."

Against the background of "extreme" demand and lack of equipment, the price of freight transport by China-Europe railway has jumped fivefold . In addition, the backlog of containers on the border between China and Kazakhstan (Alashankou and Khorgos) prompted the temporary suspension of some westbound services.

 

The two-way backlog of China-Europe freight trains has stopped loading export goods! Shipping costs soared 5 times!

 

 

GEODIS, a leading French logistics company, told its customers: “The space on the westbound is very tight. According to the availability of venues and equipment, delivery is accepted according to the company’s reservations. “Since the westbound service has a very large demand for space, we require Check all possible bookings one by one. "

With air and sea transportation restricted, railway traffic is approaching full capacity, and the delays on the China-Kazakhstan border have exacerbated traffic congestion. According to Rob Foster, business development manager for Norman Global Logistics Central and North China, the main problem is traffic congestion, not service suspension. He said that "the border has a large backlog of goods, and the railway transportation company cannot handle the volume of trucks." "In the first week of December, the westbound price per 40-foot high container ranged from US$6,000 to US$10,000, four or five times that of the same period last year. Shipping companies would not even guarantee to provide space at such a price. " "Serious shortage of equipment . " It is also a key issue , especially outside of China.

 

The two-way backlog of China-Europe freight trains has stopped loading export goods! Shipping costs soared 5 times!

 

 

"By manipulating the ocean freight market, shipping companies have caused this problem to a large extent, affecting all services. For several months, airlines have been operating small ships, coupled with suspension of services, slowly forming pressure. Rail transport companies There are some containers, but there are still many containers that are leased."

He pointed out that in recent years, there has been an "explosive growth" in train services, which has increased from a few times a week to a few hundred times a month, putting considerable pressure on the railway network. In fact, taking Alashankou as an example, the latest data shows that this year's railway transmission volume has increased by 42% to 4,500 times, and the entire China-Europe railway network has sent more than 10,000 times.

In response to the current serious backlog of ports, the National Railway Group issued dispatch orders this month:

Dispatch order:

• Issued on November 22: From 22 to 25, shipments of outbound goods via Alashankou and Horgos except for the China-Europe Express will be suspended.

•  Issued on December 8th: From 8th to 13th, all kinds of goods exported to Erlian and Alashankou will be suspended. If there are key materials, they must be reported to the National Railway Group.

•  Issued on December 13th: From 13th to 16th, cargoes exported to Manzhouli, Erlian and Alashankou will be suspended (except for the scheduled train).

•  Re-delivery on December 16th: From 18:00 on the 16th to 18:00 on the 19th, all kinds of goods exported to Manzhouli and Alashankou except for the scheduled China-Europe Express train will stop loading.

On December 12, the National Railway Group responded to the recent congestion of the China-Europe Express, saying that the port handover capacity has indeed declined recently, and some corridors have moved slowly. The National Railway Group said this is due to the approach of Christmas in the West. The demand is strong, and the epidemic prevention and control measures at port stations have been strengthened, as a result of factors such as bad weather overseas. The railway department has taken measures to carry out source regulation and deconstruction, and adopt phased capacity regulation measures; at the same time, implement capacity expansion and transformation at Khorgos, Erlianhot and other ports to improve handover capabilities; strengthen international coordination and cooperation. China National Railway Group stated that the above measures have effectively relieved port congestion. China National Railway Group requires that China-Europe Express trains will not be suspended or installed during this period.

The above-mentioned China-Europe Express platform company said that a train from China to Europe needs to be changed twice in the middle. The first time was when China exited the CIS countries or Mongolia, the standard gauge (1435) Cm) car plate, replaced by a wide gauge (1520 cm) car plate, the second change is to go from Russia westbound to Europe, and then change from the wide gauge car plate to the standard gauge car plate, the smooth operation of the train needs Close cooperation with countries along the way.

"Because the trains on the outbound journey are blocked at the port, and there are no trains on the return journey to pick up the containers, once congestion occurs, it will be two-way." The above-mentioned person said.

 

The two-way backlog of China-Europe freight trains has stopped loading export goods! Shipping costs soared 5 times!

A freight forwarder engaged in the China-Europe freight train business in Central Asia also told a reporter from China Business News that the limited number of railway infrastructure and loading and unloading equipment in some Central Asian countries and the low level of dispatching are one of the important reasons for congestion. For example, the number of wide-gauge car plates in Kazakhstan is much lower than that of Chinese ports. After the car plates are dispatched to Europe, Kazakhstan's own ports face the problem of insufficient car plates.

Regarding the reasons for the increasing demand for China-Europe Express, an international logistics company said that under the impact of the epidemic, air freight prices have skyrocketed, and shipping companies have reduced the number of ocean freighters and the number of ports of call. The convenience and effectiveness are greatly reduced. Rail freight has become the choice of more and more customers. "Air transport capacity is limited, and freight is high. Maritime transport involves crew quarantine, cargo handling and other links, frequent personnel contacts, which were greatly affected during the epidemic. Many goods originally transported by air and sea were transferred to rail transportation, which led to the beginning of February this year. , The volume of China-Europe express trains continues to grow."

The data released by China Railway Group also showed that as of November 5, the number of China-Europe freight trains in 2020 has reached 10,180, which has exceeded the number of trains in the whole year of last year, transporting 927,000 TEUs of goods, an increase of 54% year-on-year. In November this year, the China-Europe freight train continued to operate at a high level, with 1,238 trains operating 115,000 TEUs, an increase of 64% and 73% year-on-year respectively, and the comprehensive heavy container rate reached 98.8%.

/ By TJ China Freight / Shipping

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

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

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

 

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

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

 

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

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

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

 

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

 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

/ By TJ China Freight / Shipping

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

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

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

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

 

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

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

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

 

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

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

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

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

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

 

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

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

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

This means that bookings in these countries will be affected.

 

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

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

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

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

/ By TJ China Freight / Shipping

DHL, the world’s largest logistics company, began to consider chartering ships and opening routes, and it was difficult to find one container for more freight forwarders to take unconventional actions

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, the world's largest logistics company, began to consider chartering ships and opening routes, and it was difficult to find one container for more freight forwarders to take unconventional actions
DHL considers chartering for customers

 

DHL, the world's largest logistics company, began to consider chartering ships and opening routes, and it was difficult to find one container for more freight forwarders to take unconventional actions

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.

 

DHL, the world's largest logistics company, began to consider chartering ships and opening routes, and it was difficult to find one container for more freight forwarders to take unconventional actions

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.

 

DHL, the world's largest logistics company, began to consider chartering ships and opening routes, and it was difficult to find one container for more freight forwarders to take unconventional actions

"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.

/ By TJ China Freight / Transport

HOW DO FREIGHT FORWARDING COMPANIES WORK?

Businesses that engage in international transport most likely prefer freight forwarding, but it is also an applicable method of transport even for personal use. The freight forwarding companies facilitate the shipment of goods to the destinations by using various carriers such as road freight, air freight, railway freight, and ocean freight.

If you don’t have any idea about freight shipping, you’ll find freight forwarding intimidating. Thus, if you engage in a business that involves international transport, it makes sense to understand the facts about freight forwarding.

WHAT ARE FREIGHT FORWARDING FIRMS?

Transporting goods from its origin to another destination is one of the services of freight forwarding firms. The freight forwarder works as a middleman between the transportation services and the shipper.  They are responsible for arranging the entire process including the storage and the shipment of the goods. Likewise, they also negotiate the cost of the transport and choose the most reliable, fastest, and economical route.

SERVICES OFFERED BY FREIGHT FORWARDERS

Hiring the services of freight forwarding companies is advantageous to your business. They can help you in transporting the goods to your customers. As they are knowledgeable and expert about shipping of goods, they ensure that the merchandise will be delivered on time and in good condition.

Some of the services that freight forwarders offer are the following:

Customs clearance

Insurance

Packing

International import and export documentation

Inventory management and

Storage

Through the services of freight forwarders, the entire process of importing and exporting of goods becomes less stressful. They can also assist you in the packing of goods, thus reducing the pressure from you.

CHOOSE A RELIABLE FREIGHT FORWARDING COMPANIES

If you’re thinking to hire a freight forwarder, make sure to choose well-established and reliable freight forwarding companies. This gives you the assurance that they have strong experience about the business and good network of contacts. Likewise, experienced freight forwarders can deal and solve any issues about the transport of your goods efficiently and quickly.

As you’ll entrust your goods or merchandise to a freight forwarder, it makes sense to work with them harmoniously. It’s not enough to seek the service of a company that you can rely on and trust, but also with outstanding customer service. This way, you’ll have peace of mind that your shipment will arrive on time and safely.

Before entrusting your goods to freight forwarding firms, make sure that all the documents for transporting the goods are completed.

TJ China Freight Services

/ By TJ China Freight / Shipping

The freight rate in Europe and the land will continue to rise after the soaring

After a further surge last week, the spot freight rate for containers from Asia to Northern Europe is now 130% higher than the beginning of the year, up 200% year-on-year. The Far East-Europe trade route is still under tremendous pressure, and the freight rate will continue to rise further.

In the current peak season, the influx of imported goods from Asia into the United States does not seem to have eased. Los Angeles and Long Beach are still in a state of collapse and paralysis. There are as many as 20 ships lining up near the west coast, waiting for the empty space in LA Long Beach Port to unload.

Australian ports remain congested, with more than 75,000 teu stranded in Sydney.

Freight rates in the Asian intra-route market remained stable, but from the same period last year, freight rates across Southeast Asia have increased by a staggering 390.5%.

 

The freight rate in Europe and the land will continue to rise after the soaring, and the shipping companies will continue to gather wool! Congestion in West America, 20 ships in Long Beach Port line up for unloading

Europe-to-land route : The North European spot freight rate of the Shanghai Container Freight Index (SCFI) just released by the Shanghai Shipping Exchange increased by 13.5% to US$2,374 per TEU, and the Mediterranean freight rate increased by US$165 to US$2384, spot The freight rate increased by 7.4%. It is worth noting that the year-on-year growth rate in Northern Europe was 196.8%, and the year-on-year growth rate in the Mediterranean was 209.2%. But in fact, the market freight rate is much higher than this.

 

The freight rate in Europe and the land will continue to rise after the soaring, and the shipping companies will continue to gather wool! Congestion in West America, 20 ships in Long Beach Port line up for unloading

 

 

The freight rate in Europe and the land will continue to rise after the soaring, and the shipping companies will continue to gather wool! Congestion in West America, 20 ships in Long Beach Port line up for unloading

A Shanghai-based non-vessel carrier said that several shipping companies are currently offering more than US$6,000/40-foot container to Rotterdam and more than US$8,000/40-foot container to the UK.

A freight forwarder in China stated that the carriers on this route are now purely focused on maximizing freight revenue, regardless of all other agreements. He said: "Shipping companies only give priority to higher-priced spaces-whoever pays more will get the space."

 

The freight rate in Europe and the land will continue to rise after the soaring, and the shipping companies will continue to gather wool! Congestion in West America, 20 ships in Long Beach Port line up for unloading

Christoph Baumeister, senior trade manager for Flexport Asia/ISC-Europe, said the situation for Asian shippers was “worse than week after week”. He added: "The Far East-Northern Europe/Southern Europe trade route is still under tremendous pressure, and freight rates will rise further this week."

Moreover, according to data from the freight benchmark company Xeneta, the current average price of short-term market contracts in Asia and Europe of three months or less is 200% higher than a year ago, at $4,831 per 40 feet.

Although Xeneta’s long-term contract freight data showed an increase of 28% to US$1,648 per 40 feet, it pointed out that despite the peak contract season, few deals have been concluded because shippers and carriers think it’s not the time.

In the trans-Pacific region , the spot freight rate remained basically unchanged last week and stabilized at a record level. According to SCFI data, the spot price on the west coast of the United States rose by US$68 to US$3947 per 40 feet, while the port price on the east coast fell by US$8. To $4,700 per 40 feet. The year-on-year growth rates of the West Coast and East Coast of the United States were 161.6% and 78.2%, respectively.

Since mid-September, due to the intervention of Chinese regulatory agencies, the spot market on this route has remained stable, and shipping companies hope to obtain guaranteed income from their premiums.

As the influx of merchandise imports from Asia into the United States during the peak season did not seem to ease, the Port of Los Angeles data confirmed that the port's imports in the 50th and 51st weeks increased by 37% and 54% year-on-year respectively.

 

The freight rate in Europe and the land will continue to rise after the soaring, and the shipping companies will continue to gather wool! Congestion in West America, 20 ships in Long Beach Port line up for unloading

The continued growth of imports has put tremendous pressure on the San Pedro Bay ports in Los Angeles and Long Beach. Freightos Chief Marketing Officer Eytan Buchman said: "There are reports that as many as 20 ships are lining up near the west coast, waiting for the unloading of empty spaces in the Port of Long Beach, LA. Retailers are eager to put these goods on the shelves before the holidays."

As for Australia and New Zealand routes , with the gradual improvement of the epidemic situation and the continuous growth of transportation demand during the traditional peak season, the market freight rate has increased. According to the SCFI index, the freight rate (sea freight and ocean freight surcharge) for exports from Shanghai to the basic port of Australia and New Zealand was US$2490/TEU, up 2.5% from the previous period. But the Australian shipping business is currently in a "state that has never been so bad."

The continued "chaos" in the Australian container supply chain will mean that some retailers' shelves will be empty during Christmas.

The impact of supply chain delays caused by the Maritime Union of Australia (MUA) strike in early October continues. The shipping company stated that the disruption of shipping schedules caused a backlog of "8 to 10 weeks" delays (8 weeks of delay means that retailers will not have inventory "until January of next year"), but the union denies that this is the reason. Rather, it points to the increase in demand during the peak season.

According to the Freight and Trade Alliance (F&TA), trade imbalances, resulting in a large surplus of empty containers and lack of storage areas for storing these containers, are still the main problems hindering the supply chain. F&TA Director Paul Zalai said: “Currently, it is estimated that the imbalance of containers is 75,000 teu, which is stranded in Sydney’s empty container yard and operator’s warehouse. The surplus of empty containers will cause Sydney’s logistics to fall from the current congestion state to an unsolvable situation. deadlock."

 

The freight rate in Europe and the land will continue to rise after the soaring, and the shipping companies will continue to gather wool! Congestion in West America, 20 ships in Long Beach Port line up for unloading

The peak season demand has increased the spot freight rate from China to Melbourne to US$2490, compared with US$1648 in mid-October. Paul Zalai believes that the country’s shipping industry has “never seen such a bad situation.” He explained: “Our ports are congested, services are limited, freight prices are at record highs, detention, congestion and terminal access surcharges continue to increase. "At the same time, similar shipping delays have also affected importers in the Tasman region. Due to the chain reaction caused by port congestion in Australia, the Port of Auckland in New Zealand experienced delays this year.

The market freight rates of intra-Asia routes also remained stable last week, but from the same period last year, freight rates across Southeast Asia have increased by an astonishing 390.5%. 

Although these are eye-catching figures, it is important not to forget that 65% to 75% of all goods are transported on the basis of contract freight rates rather than spot market freight rates. However, due to the exhaustion of the number of contracts (many contracts are in unexpected periods when consumer demand is out of control) the rest tends to the spot freight market. When contract negotiations restart next year, the strong bull market will also benefit shipping companies.

Andy Lane of CTI Consulting in Singapore commented: “There is still one month before the new Asian-European contract. This is under the background of record-breaking spot freight rates. Prices may rise sharply, which will have a real impact on the market."

/ By TJ China Freight / Shipping

What are the reasons for the “ship grabbing battle”?

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.

 

       What are the reasons for the "ship grabbing battle"?

 

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.

 

      What are the reasons for the "ship grabbing battle"?

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.

 

       What are the reasons for the "ship grabbing battle"?

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.

 

       What are the reasons for the "ship grabbing battle"?

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.