Global ports in turn lack of containers and high freight rates

 Global ports in turn lack of containers and high freight rates

The problem of container shortage has attracted the attention of the Ministry of Commerce. On December 3, a spokesman of the Ministry of Commerce pointed out that, on the basis of the preliminary work, the Ministry of Commerce will continue to promote the increase of transportation capacity, support the acceleration of container return, improve the operation efficiency, support the expansion of production capacity of container manufacturing enterprises, and strengthen the supervision of the market, so as to stabilize the market price and provide strong logistics support for the steady development of foreign trade.

Port operation failure caused by epidemic situation

This year, the problem of container shortage is taking place alternately across the Pacific and the Atlantic.

In the first quarter of this year, Hamburg in Germany, Rotterdam in the Netherlands, Antwerp in Belgium, as well as long beach and Los Angeles in the United States were in a state of extreme shortage of containers in the first quarter of this year. The number of containers in ports reached a record low, while a large number of containers remained in Chinese ports waiting for quarantine inspection. In the third quarter, the situation reversed. The overseas epidemic situation was serious and the port was short of manpower. According to statistics, at least 50000 TEUs of containers were piled up at Sydney port in Australia, and congestion charges were imposed on many ports in succession. However, China was in a state of one box is hard to get.

Generally speaking, container shortage and port congestion are routine problems in the industry, which are easy to occur in peak season, and are also related to port handling efficiency. However, the port operation failure caused by epidemic factors undoubtedly extended the loading and unloading time of containers.

According to the reporter of securities times, due to the need for epidemic prevention, the port of Los Angeles has temporarily reduced about one third of the dock workers and port personnel, and the loading and unloading of ships has been greatly affected. Under the continuous effect of equipment shortage and prolonged loading and unloading time in ports, a large number of imported containers are overstocked in European and American ports, the terminals are congested, and the container turnover is not smooth, which leads to the obstruction of cargo transportation.

The difference of global container shortage can be seen from the container availability index (containeravailability index) released by xchang: in July, the supply of 40 foot containers in Los Angeles port was insufficient; by the end of September, the container availability index of the port had increased by 4 times, and the supply had exceeded demand; since September, the available containers of Qingdao port began to decline, and the 40 foot container set in October The availability index for containers has halved, and 20 foot containers are also in short supply.

Strong exports in Asia

Important driving force for recovery

In the whole year, the regional imbalance of container shortage is more significant, which is directly related to the outbreak sequence.

According to the data provided by the United Nations Conference on Trade and development (UNCTAD), the arrival of global container ships began to fall below the level of 2019 in mid March and did not recover until the third week of June. Chinas new Chinas novel coronavirus pneumonia is a major epidemic disease, and the time line between the European and American epidemic worsening. This is a gradual recovery of the number of container ships arriving in Chinas ports since June, and it also corresponds to the time of Chinas blockade and cancellation of the ports. The time limit for the development of the container ships in Chinas ports has gradually increased since June.

In terms of absolute volume comparison, most regions began to recover from the third quarter, but globally, the berthing volume of container ships at ports in early August was still 3% lower than that of the same period last year, and that of North America and Europe was 16.3% and 13.2% lower than that of the same period last year. In contrast, the number of ports in China (including Hong Kong) has exceeded last years level, with an increase of 4.1%.

Chinas shipping import and export took the lead in recovery. The fundamental factor lies in the significant achievements made in domestic epidemic prevention and control, and the production side took the lead in recovery, which effectively made up for the global supply gap caused by the impact of the epidemic situation, and also supported the sustained growth of exports.

China Customs statistics show that in the first and second quarters of this year, Chinas import and export growth rates were - 6.5% and - 0.2%, respectively. In the third quarter, Chinas import and export growth was reversed, with a year-on-year growth of 7.5%. The total import and export volume reached 8.88 trillion yuan. The import and export of foreign trade stabilized quarter by quarter, and the cumulative growth rate turned negative to positive. It is worth noting that due to the change of lifestyle caused by the epidemic situation, the export of notebook computers and household appliances has increased; the export of epidemic prevention materials has also risen rapidly, with the export of textiles including masks reaching 828.78 billion yuan, an increase of 37.5%; the export of medical materials and drugs, medical instruments and devices has increased by 21.8% and 48.2% respectively.

According to the information provided to the reporters of the securities times, although China was the first country to suffer from the epidemic, in the first quarter, Chinas overseas trade, transportation and export were not interrupted, so Chinas port transportation remained unobstructed and undamaged; on the contrary, in the second quarter, due to the continuous upgrading of blockades by various countries, economic activities were limited, and the transportation of logistics personnel was blocked, leading to various countries At this time, the impact on port operation is significantly expanded. Subsequently, the epidemic situation in Europe and the United States became more and more serious, and the key value of the container transportation industry also hit the bottom in the middle of the year. At the end of May, the world port Association pointed out that about 45% of the worlds container ships berths dropped by 5% to 25%, and most of the ships cancelled were from the Far East routes.

The novel coronavirus pneumonia has reduced the rental revenue of large container ships by half, and the global capacity recovery has increased by 2.8% from the three quarter to 123 million TEUs, the strong export from Asia has become an important driving force for the recovery of the Soviet Union, according to Alphaliner, an international shipping consultancy analysis.

In terms of capital market, the share prices of Listed Companies in the A-share consolidation industry started from June, and rose significantly in the third quarter. The performance of CIMC group, COSCO Haikong and other related listed companies also increased significantly in the third quarter.

Strong demand for containers

In the first half of this year, many shipping companies around the world took the initiative to suspend shipping under the influence of the epidemic.

As one of the worlds top five airlines, Rolf habben Jansen, CEO of Herbert, pointed out at the third quarter performance presentation meeting that in April of this year, demand suddenly dropped by 20%, and the monthly loss was $200 million. Therefore, it was necessary to suspend shipping to cut costs by 60%. The market at this stage is driven by demand, not by inventory replenishment, and the whole market is trying to get empty containers back to where they need to be, he said

In terms of container freight rates, Shanghai export container freight index (SCFI) and China export container freight index (CCFI) issued by Shanghai Shipping Exchange hit new highs. On November 27, CCFI quoted 1198.72 points, an increase of 4.6% over the previous week; SCFI quoted 2048.27 points, an increase of 109.95 points over the previous week. Under the strong demand, the prices of export containers also rose sharply. On November 27, the price of export containers on Southeast Asian routes was quoted at 995.67 points, up nearly 20% from the previous week.

According to the analysis of CSCI, the supply side has not put in large-scale transport capacity at this stage, while the demand side is growing rapidly, which will become the fundamental reason for the rise of freight rates in the container transportation industry. Although the global economic expectation is pessimistic due to the epidemic, the PMI index of European and American manufacturing industry is still in the expansion range driven by the policy, which provides the economic basis for the rise of freight rates.

However, some shipping company personage pointed out to the reporter of the securities times that in the past 10-12 years, the consolidation and transportation industry has not made any money, or even the cost of capital; the long-term low-cost competition is difficult to promote the healthy development of the industry.

So, can the epidemic promote the long-term recovery of the industry? Most people in the industry are cautious about this. Rolf habben Jansen points out that the current market is very, very strong, but it is illogical to think that it will continue in the next few years.. He expects the next three or four quarters to change and the company needs to be ready to act quickly. Container shipping companies and leasing companies also told reporters that it is difficult to predict the future market. Although the strong demand for containers is expected to last until the first quarter of next year, there is still great uncertainty in the market supply and demand trend after the middle of next year. If the European and American countries are still under blockade or the R & D and promotion of vaccines are not as expected, and the macro-economy falls into a continuous recession, the good growth momentum of container transportation industry may not be maintained. Source: Securities Times editor in charge: Yang Bin_ NF4368

Rolf habben Jansen points out that the current market is very, very strong, but it is illogical to think that it will continue in the next few years.. He expects the next three or four quarters to change and the company needs to be ready to act quickly.