Yesterday, we talked about the early arrival of this year’s shipping peak season, which caused port congestion. Today, we will delve into it and talk about the impact of this phenomenon.
So, why does this happen? Several reports from market research agencies stated that in the past year, many large European retailers have experienced a surge in demand for Asian goods, which has also forced the number of containers to increase accordingly.
Maybe it’s not very convincing. Let’s look at a set of data. In 2019, there were about 42.5 million available containers in the world, but at the beginning of this year, the number of available containers rose to 50.5 million, a full 8 million more.
But it is still the same old problem. If the problem of port congestion is not solved, then no matter how many new containers are added, it will be in vain. Currently, about 12% of the world's container ships are stuck outside clogged ports for too long.
As we all know, the congestion problem at the Port of Los Angeles and Long Beach has not been well solved, so various shippers have also changed their strategic directions and switched to eastern ports.
This has also caused a sharp drop in the number of ships waiting at the Port of Los Angeles and Long Beach. In January 2022, there were more than 100 ships waiting, while in May, there were only about 28 ships.
Not long ago, shipping capacity between Asia and the East Coast increased by 25% compared with 2021. Because many people really don’t want to wait endlessly at the port.
Congested ports, shortage of containers, and insufficient shipping capacity. This series of problems will inevitably lead to an increase in global freight rates. Although it has been slightly reduced, it is still a drop in the bucket and cannot return to 2019.
Let’s take a look at the recent global container freight index. The shipping price from China/East Asia to the West Coast of North America is US$10,076 per 40-foot standard container.
You must know that before the price did not rise crazily, the price of this line only hovered around US$5,500/FEU. Even last year, it was only US$5,939/FEU. This has allowed shipping companies to make a lot of money. Take Maersk Shipping Company as an example. Their performance of US$9.2 billion in the first quarter of 2022 is an easy breakthrough compared to the US$7.99 billion in the fourth quarter of 2021. .
The person in charge of Maersk also said that the long-term contract coverage rate in the second half of the year has increased a lot year-on-year. In this regard, they have raised the original planned full-year profit of US$24 billion to US$30 billion.
The biggest reason for delays at ports is the insufficient shipping capacity of ships. Just imagine, the large demand for transportation, coupled with the unmatched transportation capacity, requires ships to continuously transport in and out, which will undoubtedly increase the port's transportation capacity, but this vicious cycle is still continuing.
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