Source: Securities Times
Data source: Ministry of Transport United Nations Conference on Trade and Development (UNCTAD) Zhai Chao/Drawing
Securities Times reporter Ruan Runsheng
Against the backdrop of the COVID-19 epidemic raging around the world, this year’s global container shipping industry seems to be on the edge. A magical "seesaw" has emerged. On one end is a shortage of containers and rising freight rates, and on the other end is port congestion. The two problems occur alternately across oceans and continents, torturing the fragile nerves of cargo owners.
However, although industry analysts are singing the praises of the recovery of the container shipping industry, industry insiders are still cautious about the "boom" that occurred during the epidemic. Especially after the middle of next year, the market supply and demand trends are still like smoke and mirrors, and there are still major problems. of uncertainty.
The shortage of containers has attracted the attention of the Ministry of Commerce. On December 3, a spokesman for the Ministry of Commerce pointed out that it will work with relevant departments to continue to promote the increase of shipping capacity on the basis of preliminary work, support the acceleration of container return, improve operating efficiency, support container manufacturing enterprises to expand production capacity, and increase the support for container manufacturing. Strengthen market supervision, strive to stabilize market prices, and provide strong logistics support for the stable development of foreign trade.
The epidemic has caused port operations to malfunction.
Container shortages have occurred alternately across the Pacific and the Atlantic this year.
Bloomberg data shows that in the first quarter of this year, European and American ports such as Hamburg in Germany, Rotterdam in the Netherlands, Antwerp in Belgium, and Long Beach and Los Angeles in the United States all fell into an extreme shortage of containers. The number of containers at the ports hit a record low, and Chinese ports were stranded. A large number of containers, waiting for quarantine. In the third quarter, the situation reversed. Overseas epidemics were severe and ports were short of manpower. According to statistics, at least 50,000 TEU containers were piled up at Sydney Port in Australia to be processed. Ports in many countries were charged congestion fees. However, China fell into a " Boxes are hard to find”.
Generally speaking, problems such as lack of containers and port congestion are routine problems in the industry. They are easy to occur during peak seasons and are also related to port processing efficiency. However, the port operation failure caused by the epidemic has undoubtedly prolonged the loading and unloading time of containers.
According to a reporter from the Securities Times, due to epidemic prevention needs, the Port of Los Angeles has temporarily reduced about one-third of its dock workers and port personnel, and ship loading and unloading have been greatly affected. Due to the ongoing problems such as widespread equipment shortages and prolonged loading and unloading times at ports, a large number of imported containers have been backlogged in European and American ports, leading to congestion at terminals and poor container turnover, leading to disruptions in cargo transportation.
The difference in the global container shortage can be seen from the container availability index (Container Availability Index) released by the container traceability platform xChang: In July, the supply of 40-foot containers at the Los Angeles port was insufficient; by the end of September, the port's container availability index had increased fourfold. Already oversupplied; since September, the number of available containers at Qingdao Port has begun to decline. By October, the availability index of 40-foot containers had dropped by half, and 20-foot containers were also in short supply.
Asia’s strong exports have become an important driving force for recovery
Throughout the year, the regional imbalance in container shortages is more significant, which is directly related to the timing of the outbreak.
Data provided by the United Nations Conference on Trade and Development (UNCTAD) show that global container ship arrivals began to fall below 2019 levels in mid-March and did not begin to recover until the third week of June. This timetable is basically consistent with the World Health Organization’s classification of COVID-19 as a pandemic and the worsening epidemic situation in Europe and the United States; on the other hand, the gradual recovery of container ship arrivals at Chinese ports since June is also consistent with China’s The blockade lifting time corresponds to that.
In terms of absolute volume comparison, most regions have begun to recover from the third quarter. However, globally, the number of container ship berths at ports in early August is still 3% lower than the same period last year. North America and Europe are 16.3% lower year-on-year respectively. % and 13.2%. In contrast, the number of port calls in China (including Hong Kong) has exceeded last year's level, with an increase of 4.1%.
China's shipping import and export took the lead in recovery. The fundamental factor is that domestic epidemic prevention and control has achieved significant results, and the production side has taken the lead in recovering, effectively making up for the global supply gap caused by the impact of the epidemic, and also supporting the continued growth of exports.
China Customs statistics show that in the first and second quarters of this year, China's import and export growth rates were -6.5% and -0.2% respectively. In the third quarter, they achieved a turnaround, with a year-on-year growth of 7.5%. The total import and export volume reached 8.88 trillion yuan, and foreign trade imports and exports gradually increased. The quarter stabilized, and the cumulative growth rate turned negative to positive. It is worth noting that due to the change in lifestyle caused by the epidemic, the export of notebook computers and home appliances has increased; the export of epidemic prevention materials has also risen rapidly, with exports of textiles including masks reaching 828.78 billion yuan, an increase of 37.5%; medical materials and drugs, Exports of medical instruments and equipment increased by 21.8% and 48.2% respectively. Information provided by
UNCTAD to the Securities Times reporter shows that although China was the first country to suffer from the epidemic, China's overseas trade transportation and exports were not interrupted in the first quarter, so China's port transportation remained smooth and was not damaged; on the contrary, In the second quarter, as various countries continued to escalate blockades, restricted economic activities, and hindered the transportation of logistics personnel, imports from various countries fell sharply. At this time, the impact on port operations expanded significantly. Subsequently, the epidemic in Europe and the United States became increasingly serious, and key figures in the container shipping industry also bottomed out in the middle of the year. At the end of May, the World Ports and Ports Association pointed out that about 45% of the world's container ship calls dropped by 5% to 25%, and most of the canceled ships came from the Far East route.
Data from Alphaliner, an international shipping consulting and analysis agency, show that the COVID-19 epidemic halved the charter revenue of large container ships in the first half of the year. Starting from the third quarter, global shipping capacity recovered, increasing by 2.8% year-on-year to 123 million TEUs. Strong growth from Asia Exports have become an important driver of recovery.
In terms of the capital market, the stock prices of listed companies in the A-share container shipping industry have also been brewing since June and rose significantly in the third quarter. The performance of CIMC , COSCO Shipping Holdings and other related listed companies also increased significantly in the third quarter.
The strong demand for containers
is expected to continue until the first quarter of next year
Returning to the container shipping industry itself, many shipping companies around the world took the initiative to suspend sailings in the first half of this year due to the impact of the epidemic.
As one of the top five airlines in the world, Hapag-Lloyd CEO Rolf Habben Jansen pointed out at the third quarter performance briefing that in April this year, demand suddenly dropped by 20%, resulting in a monthly loss of US$200 million, so flights must be suspended in order to Cut costs by 60%. He pointed out: "The market at this stage is driven by demand, not by inventory replenishment, and the entire market is working hard to return empty containers to where they need to be."
container freight rates, Shanghai Shipping Exchange released The Export Container Freight Index (SCFI) and the China Export Container Freight Index (CCFI) reached new highs. On November 27, CCFI quoted 1198.72 points, an increase of 4.6% from the previous week; SCFI quoted 2048.27 points, an increase of 109.95 points from the previous week. Due to strong demand, the price of near-ocean export containers has also skyrocketed. On November 27, the export container price for Southeast Asian routes was quoted at 995.67 points, an increase of nearly 20% from the previous week.
CITIC Construction Investment analyzed that the supply side currently has no large-scale deployment of transportation capacity, but the demand side continues to grow rapidly. This will become the fundamental reason for the increase in freight rates in the container shipping industry. Although the epidemic has led to pessimistic expectations for the global economy, the manufacturing PMI index in Europe and the United States is actually still in the expansion range driven by policies, thus providing economic fundamental support for the rise in freight rates.
However, a person from a shipping company pointed out to a Securities Times reporter that in the past 10 to 12 years, the container shipping industry has not made any money, or even recovered its capital costs; long-term low-price competition is difficult to promote the healthy development of the industry.
So, can the epidemic promote long-term recovery of the industry? Most industry players are cautious about this.
Rolf Habben Jansen pointed out that the current market is very, very strong, "but it is illogical to think that this will continue in the next few years." He expects things to change over the next three or four quarters, and the company will need to be prepared to act quickly.
Container shipping companies and leasing companies also told reporters that it is difficult to predict the market outlook. Although the strong demand for containers is expected to continue 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 European and American countries remain in a state of blockade or if the development and promotion of vaccines fail to meet expectations, and the macroeconomy falls into a sustained recession, the good growth momentum of the container shipping industry may not be maintained.
