The freight rate has soared by 50% in 4 months, and it may be difficult to maintain in the future!

The sudden large demand has caused the overall container transportation price to rise by nearly 50% within 4 months, and the freight rate of individual routes has even doubled.

However, under the background of excess capacity and unknown demand, how long can such high freight rates last?

Hot demand pushes up freight rates

When asked about the container shipping market in July and August, many practitioners, including foreign trade companies, freight forwarders, and container shipping companies, all mentioned a word-explosive cabin.

The so-called "explosive space" refers to the number of boxes actually booked by a certain ship in a certain port at a certain voyage, which exceeds the predetermined quota of containers, or the actual weight of the cargo booked exceeds the predetermined weight limit.

"For example, the actual shipping space is 300, but the shipping company releases 400. When the ship is dispatched, the goods cannot be loaded. They either stay in the port and wait for the next voyage, or transfer to other ports and then transport them away on other voyages." A freight forwarder The broker explained:

"In the past two months, the container shipments to the United States have often exploded, and the volume of my (agent) has more than doubled. Before that, I could book the space one week in advance, but now I need to advance two to three weeks."

According to data released by Shanghai Port and Ningbo Port, since June, the throughput of port containers has surged.

The container throughput of Ningbo Port from June to August was 2.657 million TEU, 2.83 million TEU and 2.808 million TEU, up 2.8%, 5.1% and 7.59% year-on-year respectively.

The imbalance between supply and demand will inevitably lead to high shipping prices.

According to the Shanghai Export Container Freight Index released by the Shanghai Shipping Exchange on August 28, the current composite index is 1263.26 points, an increase of 79.56 points from 1183.7 points in the previous period (August 21); compared with the low point in April in the first half of this year ——855.34 points, an increase of 407.92 points, an increase of nearly 50%.

The continuous strengthening of freight rates on routes such as the US West (basic port) and the US East (basic port) pushed up the container shipping price index as a whole.

A person in charge of a tempered glass product company said that the export business has not been affected by high freight rates.

"We mainly export to Brazil and Russia, all of which are signed on FOB (free on board) terms, and the freight is borne by the buyer."

And if the CIF (CIF) clause is signed, that is, the quotation of the export company includes transportation costs and insurance costs in addition to the cost of goods, and the additional costs caused by high freight rates will be borne by the export company.

Industry regulation continues to increase freight rates

"In the past few years, three major alliances were born in the industry, which is the basic factor for the increase in freight rates. The alliances can coordinate with each other in capacity, have better control over capacity deployment, and can do a better job on the supply side of the market." Germany Han Ning, director of Luli China, told the Shanghai Securities News:

"This year (the first half of the year) the market is not good. Everyone in the industry realizes that if the freight rate is not guaranteed, it will suffer serious losses. Therefore, the main strategy is to ensure that the shipping capacity will not be too high and maintain a high price, so as to survive."

The so-called three major alliances are 2M, Ocean Alliance and The Alliance formed successively by 13 container shipping companies in 2017.

Among them, 7 companies including Maersk, MSC, and COSCO SHIPPING together account for 75.5% of the global container shipping market, and the industry is highly concentrated and stable.

Han Ning believes that on the basis of supply-side capacity regulation, the resumption of work and production in the second quarter and the recovery of consumption have increased the concentrated release of demand for shipping trade in the third quarter.

"From a numerical point of view, the consumption data in the United States is not as low as everyone expected, and the consumer demand is still there." Han Ning added, "On the other hand, many companies also have considerations for early shipments to avoid possible difficulties in later shipments. trouble."

The demand for shipments and seaborne trade that began at the end of the second quarter brought dawn to the domestic shipping and port industries.

According to data from the General Administration of Customs, my country's import and export of goods trade in July was 2.93 trillion yuan, a year-on-year increase of 6.5%.

In addition to Shanghai Port and Ningbo Port, the monthly year-on-year growth rate of Guangzhou Port's container throughput has turned positive since April, and the cumulative data has also begun to catch up with the same period last year.

As of August, the container throughput of Guangzhou Port has completed a total of 13.76 million TEU, a year-on-year increase of 2.2%.

In terms of container shipping companies, COSCO Shipping Holdings achieved revenue of 74.053 billion yuan in the first half of the year, a year-on-year increase of 2.7%.

Among them, the container shipping business revenue was 71.588 billion yuan, a year-on-year increase of 3.89%. In the first half of the year, the company's container fleet completed a cargo volume of 11.8457 million TEU, a year-on-year decrease of 4.93%.

It can be seen that high freight rates are obviously the key factor for COSCO SHIPPING Holdings' traffic and revenue to go against each other.

Can high freight rates be sustained?

Although the demand is strong, many people in the industry believe that the high freight rate is unsustainable.

"In the long run, high freight rates are definitely unsustainable, and everyone will eventually return to a relatively healthy and stable market." Han Ning believes that continued high freight rates will lead to the intervention and investigation of competent authorities in various countries or regions. To curb high freight rates.

In mid-August, the Water Transport Bureau of the Ministry of Transport sent inquiry letters to six large container shipping companies to investigate whether there is a supply and demand monopoly.

In this regard, the container shipping company stated that there is no monopoly of supply and demand, and the increase in freight rates is due to the imbalance between supply and demand caused by the increase in shipments in the short term.

Coincidentally.

The U.S. Federal Maritime Commission also began to investigate the container shipping company on August 28, and is considering formulating monitoring methods for measures such as shift reduction: Attention! The US Federal Maritime Administration launched an investigation on the US line [freight, suspension]!

The above-mentioned freight forwarder believes that the third quarter is the traditional peak season for shipping, and price increases are a common phenomenon.

"The first half of the year is the off-season. The cheapest freight to South America is only a few hundred dollars. Now the freight rate of a high container has risen to 4,000 dollars. However, it should be relieved after October."

A staff member of COSCO SHIPPING Holdings said: When the current situation of excess capacity in the industry has not been fundamentally changed, there is no long-term basis for high freight rates.

According to the data from Alphaliner, a third-party organization, in early June, the idle capacity of global container ships reached 521 ships and 2.61 million TEUs, higher than the idle number of 1.52 million TEUs after the global economic crisis in 2008.

With the release of demand, previously idle capacity is being gradually put on the market.

Drewry's monthly report showed that the share of global container capacity idled fell from 9.8% in June to 7.4% in July.

This suggests that half a million TEUs of capacity have been put back on the market in just one month.

However, it is not easy to continuously deploy capacity. In addition to the need for long-term and stable cargo flow, recruiting a basic number of seafarers has become a difficult problem.

"If the freight rate is high, some shipping companies will eventually be unable to control it and cut prices to sprint for market share. At this time, the freight rate will drop." Han Ning concluded, "Before this, the company will keep silent and enjoy the less shipping capacity. market dividends. ”

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