"No! We haven't seen this special phenomenon for a long time." Chen Yang, editor-in-chief of Xinde Maritime Network, a professional shipping information consulting platform, told China Business News. What he calls a "special phenomenon" is the dilemma of "hard to find" shipping c

"No! We haven't seen this special phenomenon for a long time." Chen Yang, editor-in-chief of Xinde Maritime Network, a professional shipping information consulting platform, told China Business News. What he calls a "special phenomenon" is the dilemma of "hard to find" shipping containers since 2020. Now, at the end of the year, the situation is still fermenting.

Chen Yang said that the last time there was a major congestion in the container supply chain worldwide was in 2016, when Hanjin Shipping, the world's seventh largest and South Korea's largest shipping company, filed for bankruptcy protection, ending its 40-year-old container business. Chen Yang recalled that at that time, ports in many countries were worried about its breach of contract and refused to allow Hanjin ships to enter the port or detained Hanjin Shipping's containers, causing container congestion around the world. "But this time, the nature is completely different."

Trade is active, making the container throughput of Shanghai Port hit new highs this year. In October, the container throughput of Shanghai Port exceeded 4 million TEUs in a single month for the first time, setting a new monthly historical record with 4.2 million TEUs.

Benefiting from the strong market demand, the freight rate of container ships has also increased. An employee of a freight forwarding company told China Business News that in recent weeks, container freight rates of major shipping companies have been rising every day and week by week, with the most popular European and American routes experiencing particularly significant increases.

For example, he gave the example that the freight rate for containers sent from Shanghai to Los Angeles, USA, has skyrocketed from around US$1,200 in March to US$4,000 in November. “And as Christmas approaches, this price will go up.”

Experts interviewed by China Business News all believe that the imbalance of global trade structure, coupled with the sudden disruption of the epidemic in 2020, has caused the container "empty container crisis" to intensify. Chen Yang emphasized to China Business News that there is currently a shortage of shipping containers, but to a large extent it is a relative shortage, or a structural shortage, rather than an absolute shortage. "The current sharp increase in container freight is a structural problem and cannot be understood as a manifestation of economic recovery on a global scale."

China's port "container availability index" dropped to the lowest this year

Currently, how much congestion is there in shipping containers around the world? serious?

Container xChange spokesperson Florian Frese, a platform that provides shippers with traceability of available containers, said in an interview with China Business News that currently, there is an extreme shortage of 40-foot high-container containers. Previously, the demand for this type of containers was still low. Not so nervous for a time.

"Our monitoring data shows that almost three-quarters of 40-foot high-container containers have been shipped, so empty containers are hard to find." In addition, compared with last year, 20-foot ordinary dry cargo containers (20DC) and 40-foot high-container containers have been shipped. ft. ordinary dry cargo containers (40DC) are also in extremely short supply.

"Currently, it is difficult to buy or lease empty containers in China," Fraser said. The "Container Availability Index" (CAx) developed by

Container xChange can quantify the container availability at major ports around the world. The index shows that currently, Shanghai Port has a serious shortage of 40-foot high container containers and is "in a state of deficit." This value is only 0.07, the lowest point recorded this year. Monitoring for the same period last year showed that this value was 0.69.

According to the definition of Container xChange, a CAx exceeding 0.5 indicates that the port has surplus container equipment, while a CAx lower than 0.5 indicates insufficient equipment.

It is worth noting that this is not a phenomenon unique to Shanghai Port. Data from Container xChange shows that the availability index of Qingdao Port's 340-foot ordinary dry cargo container is only 0.17; the availability index of 40-foot high container containers is 0.23; and the availability index of 20-foot ordinary dry cargo containers is 0.14. The above data are lower than the same period last year.

The scarcity of containers at domestic ports has directly led to a sharp increase in freight rates at major ports.

Taking Shanghai Port as an example, as of November 27, the Shanghai export container comprehensive freight index released by the Shanghai Shipping Exchange was 2048.27 points, a new high since the financial crisis. And this climb continues. During the same period, China's export container comprehensive freight index also climbed to 1198.72, an increase of 4.6% from the previous issue (November 20), and the increase continued.

The superimposed effect of trade imbalance and the epidemic

So, where are the containers that China is extremely "craving" currently piled up?

Fraser said that currently, containers are mostly concentrated in European and American ports. For example, port operations in California, the United States, are in paralysis. Due to delays, more containers have accumulated, making the "empty container crisis" at Chinese ports intensified. She also pointed out that currently, demand in Africa and South America is also very strong, but the size of some containers does not meet the transportation requirements of the goods. Therefore, it is not easy to find boxes of the right size in the current widespread shortage of boxes.

Chen Yang also believes that the current empty shipping containers are mainly concentrated in the United States, Europe, and Australia.

Chen Yang told China Business News that the massive congestion of shipping containers has a lot to do with the current imbalance in international trade. “Originally affected by the epidemic, many analysts believed at the beginning of this year that the container shipping market might lose tens of billions of dollars this year,” Chen Yang said. “But in reality, this has not happened. Starting from June, demand from Europe and the United States has The surge is unexpected."

He analyzed the United States as an example. Starting from June, all states in the United States began to work remotely, which drove home consumption, coupled with the U.S. government's successive economic stimulus policies. , personal consumption expenditures continued to increase. "On the other hand, Asian countries represented by China have relatively better control over the epidemic. Therefore, global production relies more on China, Vietnam and other countries. As a result, containers depart from China and Vietnam at full capacity, but very few come back. .”

When containers from China or Vietnam are assembled at European and American ports, why can’t they come back? Fraser believes that this is the delayed effect of the blank sailings in the past few months. "The interruption and delay in shipping caused by the epidemic have seriously disrupted the normal rhythm of empty containers in international trade."

Chen Yang also believes that although the number of containers received by European and American ports has increased dramatically in the past few months, the epidemic has led to a decline in port operation efficiency. For example, currently, most of the containers sent from Asia to the United States are concentrated in California, New York, New Jersey, and other places. “These local governments have adopted relatively stricter anti-epidemic policies, so port workers and truck drivers have reduced their work, and container trailers There are also shortcomings. The speed from ports to inland factories has also slowed down. "

Europe and the United States are currently experiencing a resurgence of the second wave of the epidemic, and there are many shortages of workers and vehicles at ports. In addition, data show that due to various factors, the ship's on-time rate dropped from 85% to 90% in June to 56% in September. The average shipping schedule was delayed by five days, and the on-time rate continued to decline.

The latest report from shipping consulting company Sea Intelligence shows that the global ship schedule rate dropped to a historical low in October, to 52.4%.

Currently, the waiting time for ports on the West Coast of the United States is 4 to 5 days. Although the epidemic control situation is better in Australia and New Zealand , various controls still cause congestion at the terminals. For example, the waiting time for Auckland exceeds 10 days, and the UK's fees Lesto has announced that it will stop collecting empty containers due to port congestion.

Sri Lanka's port, vital to South Asian shipping, is the latest to join the global list of ports crippled by congestion.

Sri Lanka's capital, Colombo, has been under lockdown for the past few weeks due to the epidemic, and labor shortages at local container terminals have caused severe congestion since early October. Currently, Colombo Port has a backlog of 50,000 TEU (standard units) of goods, causing South Asia's transshipment cargo to fall into chaos and affecting the supply chains of neighboring India and Bangladesh.

"In the context of strict anti-epidemic measures, the gathering and transportation efficiency of foreign ports has dropped significantly, leading to congestion in the entire logistics chain. This is not a problem in one or two links." Chen Yang said. At the same time, short-term general strikes occurred in some ports such as Australia, which also affected the efficiency of port gathering and transportation during special periods.

In addition, Chen Yang also pointed out that the new coronavirus has been frequently detected in cold chain containers returning to China from Europe and the United States recently, which has also aggravated container congestion to a certain extent.

Container shipping companies are trying their best to overcome the empty container crisis

In this regard, Fraser said that the key factors to remain competitive during the current epidemic are, first of all, to increase transparency and at the same time be flexible. As equipment becomes scarce, people begin to look for alternatives. The popularity of SOC containers and the more effective advantages of online trading platforms are clearly reflected.

The so-called SOC box is the cargo owner's own box. An employee of a state-owned enterprise told China Business News that the company had previously sent goods to Africa in the form of 20 SOC boxes. “However, due to the current high freight rates of shipping companies, the company decided not to ship back the self-purchased containers for the time being, but instead shipped them locally.” It will be used temporarily as a warehouse."

Chen Yang said that in fact, major container shipping companies are currently working hard to overcome the problem of capacity shortage, "but arranging container ships to travel on the sea is obviously not as simple as arranging taxis," he told First. Financial reporter, data provided by Alphaliner show that during the worst period of the epidemic in the first half of the year, container shipping companies temporarily suspended 11% of global container ship capacity in order to reduce costs. "It will take a certain amount of time to activate these ships that are either cold idle or hot idle."

In addition, in order to meet the shipping schedule and transport European and American empty containers back to Asia as soon as possible, according to the China Business News reporter, many ships The company has tried its best not to take back the goods. For example, it is currently the peak season for U.S. grain exports. Since it takes about two weeks for containers to move in and out of the inland, and grain is heavy cargo, which affects the loading capacity of ships, the German shipping company Hapag-Lloyd has publicly announced a suspension of harvests. Most other companies choose to reject full containers in actual operations.

In this unprecedented container supply chain crisis, large container leasing companies have seen business opportunities and have stated that demand will still be strong in the coming months. The largest container manufacturers are also taking more orders than before.

In this regard, Chen Yang reminded not to be too optimistic when investing in containers and beware of bubbles. He is bearish on long-term value investments. "If the situation stabilizes next year, there will be a surplus of containers."

"We don't think this situation will ease in the next few months," Fraser said, "but as vaccines are developed The good news continues to come, and the situation of being hard to find a box may improve next spring, and international trade in goods will become normalized.”