Picture source @Visual China
Text | OUTSIDE outside the Fifth Ring Road, author | Xiaozhi, editor | Zhang Jiajia
For many South China shipping-related practitioners, this may be the most chaotic spring in their lives.
The container throughput of Shenzhen Port was severely affected by the epidemic, with a year-on-year growth rate of -10.9% from January to February. The outbreak of the epidemic in Hong Kong has caused a sharp drop in seaport capacity. When I came back to my senses, there were already about 162 ships stranded in South China ports.
Starting from March 22, Shenzhen, the number one city for cross-border e-commerce, and Hong Kong, which relies on trade and logistics as its backbone, these most important ports in South China have reached the most serious congestion in five months, which can be called the southeastern coast. "Capacity black hole".
html From November to February, Shenzhen port throughput dropped sharply. Source: Port Circle Even the most optimistic shipping people must admit: the unblocked Shenzhen port is still congested and in a mess, and there are still more than 100 people a day. cases were imported from Hong Kong.
As transport capacity declines, demand for shipping space exceeds supply, and freight rates are “singing all the way” with no end in sight. The wealth of shipping companies and first-class freight forwarders is expanding, and the pressure on factories and cargo owners is increasing... The international supply chain of in South China is infected with a fever of chaos.
What went wrong with the South China port group that once waved its steel giant arm, transformed into a window to the world, and created a dazzling international metropolis? What is the crux behind the shortage of shipping capacity and distorted freight rates?
Under the storm in the South China port, a crisis is secretly surging.
01 The transport capacity and freight rates are two-tiered, and making money depends on building relationships.
"Before, a container could go to the UK for 1,000 US dollars, but now it costs 10,000."
"The ship to the United States has added 8 new cabins, each costing 12,000 US dollars. Customers came over eagerly one after another. It was a pity for this old customer just now. He was a few seconds late and the space was already booked." Mr. Kun smiled apologetically.
When I met Mr. Kun, the calls for him to book cabins were still coming in. While talking on the phone incessantly, he quickly put away the satchel under his arm and sat down. The situation was as if the frontline battle situation in the Anti-Japanese War movie was critical, and the support applications for maritime warships were waiting for his approval one by one.
Kun is tall and has a slightly dark complexion. His company has been rooted in the industry for many years and has long-term relationships with MSC, MSK, COSCO (MSC refers to Mediterranean Shipping Co., Ltd. , MSK refers to Maas Lines, and COSCO refers to COSCO Group ). We have a cooperative relationship and often carry out transportation in multiple ports such as Nansha in Guangzhou, Yantian in Shenzhen, and Shekou in Shenzhen.
Kun is always a " freight forwarder" . He started doing foreign trade logistics in 2006. After experiencing the worst financial crisis in 2008, he is familiar with this industry.
The basic business of general freight forwarders is that manufacturers first come to them and put forward shipping requirements. They then go to the shipping company to inquire about shipping schedules and book containers, then arrange customs clearance, and finally transport the goods to designated ports in Guangzhou and Shenzhen for shipment. Each cooperating shipping company will provide them with 100 to 200 shipping spaces according to long-term contracts. But if the demand for space exceeds the fixed amount, whether the excess can be met depends on the relationship with the shipowner.
"Actually, the global shipping capacity is already in excess. Why is there such a shortage of cabins now? This has to start with the epidemic in 2020." Mr. Kun said.
Since the outbreak of the epidemic, many ports around the world have implemented strict prevention and control measures. In order to cooperate with epidemic prevention measures, terminal operation efficiency has dropped significantly. Port workers, freight drivers, and ships passing by may all have to undergo nucleic acid testing and 14-day quarantine. Coupled with the increasing number of ships and cargo congestion at the docks, the current congestion situation is like a black hole that endlessly swallows up shipping capacity.
Mapping of the five influencing factors leading to port congestion: Outside the Fifth Ring Road
"It's like taking a bus. The bus only stops at one stop for about 30 seconds. If the bus enters the station and needs to be quarantined with nucleic acid, it will stop at one stop for 14 minutes. , It took a long time for one to come, and the bus station would be jammed. This is how the port's capacity has declined." He gestured as he spoke, and I suddenly realized.
and transportation capacity is the most important variable affecting freight prices.The contradiction between supply and demand brought about by 's low transportation capacity determines the hot and high freight prices.
Mr. Kun told me that the price of their cabinets going to , Chile, and is now around 8,000 US dollars, while the price of their cabinets going to the United States is about 10,000 US dollars. Before the epidemic, the price of the two was only one-tenth.
But no matter how high the bid is, some cabins are difficult to buy, such as Matson (Mason Steamship Co., Ltd.). "There is a lot of water in these high freight prices. It is not a big deal to take advantage of the epidemic to drive up freight prices. Those who secretly have a tacit understanding of monopoly will be called ruthless." Mr. Kun said in a low voice.
019~2022 changes in sea freight rates Data source: Ministry of Transport of the People's Republic of China Tabulation
The term "tacit monopoly" is also a stage product of alienation under this round of epidemic.
He explained that this is related to the cooperation of shipping companies. Economic globalization has promoted the globalization of logistics. Cargo ships around the world occasionally have excess or insufficient shipping capacity. At this time, they will choose to work together to improve transportation efficiency. When ship A has spare capacity, it will load cargo for ship B. When ship B has spare capacity, it will load cargo for ship C. Ship C may also load cargo for ship D.
The cargo carried by ships is always huge, so settling accounts is a must. When ship A helps ship B carry cargo at a high price, ship B may also load cargo for other ships and merchants at the same high price in order to pass on the pressure. The same goes for other ships. An increase in freight rates in a certain region will cause a chain reaction of increases in global freight rates.
It is a good thing to help each other, and it is human nature to settle accounts openly.
However, shipping companies can also use this as an excuse to charge ultra-high shipping prices to foreign trade companies. This has formed a tacit "tacit monopoly" among the shipping companies. At present, there is a huge contradiction between supply and demand, a shortage of transportation workers, and port congestion everywhere. Many excuses have also made antitrust investigations into shipping more difficult.
"Now that the congested European and American ports are slowly unblocking, because they have low virus prevention and control requirements, it is estimated that freight rates will drop by 10 to 20% this year. But even if the epidemic passes, shipping companies will maintain the artificially high freight rates for a period of time , This is inevitable. Some freight forwarders are also following suit. It used to cost 1,000 US dollars to go to the UK, but now it costs 10,000. "Oh my god, those foreign trade companies who are struggling to wait for the freight rate to drop will be miserable." I frowned.
Such high shipping costs are extremely detrimental to China's foreign trade. Mr. Kun continued: "China has many products with low technical content, and the value of the goods is lower than the freight. If these ordinary goods cannot be exported due to high freight, I am very worried that it will cause an economic crisis and the arrival of ."
epidemic Among the troika that drives the economy, exports are the top priority that affects people's livelihood.
"If sea freight rates continue to drop, foreign trade will be affected even more, and the real manufacturing and consumer industries will suffer the most. At that time, we can only invest in infrastructure, build roads, and activate basic industries to solve employment. Even the above will not be able to do so." I'm worried about this." Mr. Kun couldn't help but shake his head.
"Having said that, what do you think is the most important thing when international logistics reaches your level?" I asked.
Mr. Kun stopped while picking up the tea cup, pondered for a moment, and replied: "Relationship. Just like Feitian Moutai, you have to have a strong relationship with your customers to get the agency and get the goods. In these years, I have not Don't socialize with customers and do public relations, otherwise you can only make a lot of money in this epidemic if you are involved in rebates "Then your company must have made a lot of money last year, right"
" It was very busy. More than 600 people in our company worked hard until the first day of the Lunar New Year. Everyone was very helpful, so everyone received an extra bonus of 8,000 yuan during the holiday. "
Front-line logistics employees can get rich rewards after their hard work. Can those at the center of supply chain chaos be so lucky?
02 Millions of goods are backlogged. When will freight rate regulation come?
"It is hard to find a ship, and there are no rules to follow on the shipping schedule. I am afraid that the company will go bankrupt."
Liang Shiyun works in a Hong Kong group. Her daily work is mainly to monitor the company's international status. All links in the supply chain. The day before the interview, she unfortunately was called by the customs for an education.
Passport used for passing through the customs compound
"Because I imported a batch of copper-clad laminates worth more than 10 million US dollars, as well as copper foil , steel, peanuts, circuit board base materials, etc. The customs asked me to explain these. What it is, how to buy it, and how to sell it. I don’t know how the boss wants to sell it, but people say that I am a customs officer and must know. Fine~" Shiyun spread her hands and shrugged.
7-year-old Liang Shiyun is wearing a well-tailored suit with a rich sense of design. She speaks generously, enthusiastically and straightforwardly. Just from her high-pitched tone, you can tell that she is very interested in this interview about shipping and can’t wait to hear it. Confess your feelings.Copper clad laminate - the basic material for electronic products such as aviation, aerospace, electrical appliances, etc.
Her work process is simple and clear: accept the order → arrange production → confirm the delivery plan with the customer → consult the shipping date → confirm the shipping date with the customer → arrange return of goods Quality inspection→confirm with the engineering department→confirm order collection and finance department→arrange shipment/customs declaration/boarding→send invoicing details to finance→prepare tax refund→confirm arrival time and arrange to send out information→archive order information.
Among them, shipping schedule and shipment are the two links that have frequently gone wrong this year.
"Now the international market in the transportation industry has been completely disrupted. Ocean and air freight rates have skyrocketed, shipping companies have changed routes irregularly, and the conflict between Russia and Ukraine has brought about the problem of insufficient manpower. Even the customs investigation of imported goods is intensifying, and less Everything I know is being investigated to death," Liang Shiyun complained to me in a barrage of words.
Liang Company's goods are mostly exported at Yantian Port or Shekou Port in Shenzhen. Guangzhou Nansha Port is a direct shipping terminal, but the shipping schedule is short. Guangzhou Huangpu mainly imports. Because the cost and time cost of loading at this port are too high, customers will not choose this port.
Therefore, the multi-faceted impact of the "black hole of transportation capacity" in South China ports directly caused Shiyun's company to suffer a lot of losses. Coupled with the impact of e-commerce, her company has closed a large part of its business.
shipping bears the brunt. It is difficult to find a ship, the ship schedule is canceled, and the sailing/arrival/departure time is chaotic, which often disrupts their supply plan. Then there is the dock. After the ship arrives, it may be delayed in entering the port, so the goods can only be placed at the congested dock after arriving at the dock. The daily yard fee, unloading fee, and hanging container fee add up to four figures.
Maersk Line ’s port jumping notice
Then there is the capital chain problem, which is also the most serious problem.
The sky-high shipping costs brought about by the "black hole of transportation capacity" can be said to have abruptly cut off their foreign trade capital chain. Their company adopts the FOB trading method (FOB, the abbreviation of "Free On Board" in English, which means free on board at the shipping port, also known as FOB price), and the customer is responsible for shipping.
A Dominican customer sent a deposit to place an order for goods. However, after production was completed, the customer was persuaded by the skyrocketing freight prices and eventually abandoned the goods. Millions of goods have been backlogged in the warehouse to this day, and the pressure on the capital chain has increased sharply.
“I want to wait until the customer has money before shipping, but the warehouse rent is high, the labor cost is high, and the goods have to be inspected repeatedly. The main reason is that I am afraid that some goods will oxidize; I want to ship first, but I am afraid that the customer will disappear after taking the goods without paying. It’s really contradictory. Many of our colleagues are worried about the company going bankrupt.” Shiyun closed her eyes and patted her forehead in confusion.
So, what is the current situation of foreign trade companies that do not use FOB?
Shiyun quickly responded: "It's even worse! Companies that use the CIF trade method (CIF, the abbreviation of "Cost Insurance and Freight" in English, meaning cost plus freight plus insurance) are the most disadvantaged. They either cannot order ships or ship goods. Sea freight prices may inexplicably skyrocket by thousands of dollars, causing the shipper to lose money, customers not understanding, and even abandoning the goods. "
Because the supply chain is much more chaotic than in previous years, there are often many emergencies, like Liang Shiyun's experience. Managers who are experienced and adaptable are highly valued in the company.
Having been engaged in supply chain management for so many years, Shiyun has three insights:
First, identify bad freight forwarders , and find out the strength and relationship chain of the other party before cooperation to avoid being charged high prices on the pretext of increased freight costs.
Second, understand the policy, communicate with customers in a timely manner to avoid being unable to deliver goods after paying money.
Third, the flow of goods/payment/freight must be clear , and export customs declaration information and order signing information must be available.
sounds simple, but the information to be processed is huge. Shi Yun said with a tired face: "There are too many things to know in this business, policies and regulations need to be understood, chaos at the port needs to be paid attention to at all times, even wars I have to assess the impact, let alone commodities, finance, warehouses and freight forwarding. ..... I am rushing to learn new knowledge every day. "
" By the way, there is a war between Russia and Ukraine recently. Has it affected your company's business? "
" We are in tears because of the war. We lost a large Russian customer worth tens of millions. At that time, we still had a batch of goods that we had not shipped to him. Since the waterway transportation capacity was not enough, we forced the goods to be shipped by rail and air transportation. However, the transportation of this thing will definitely not be interrupted. "Yes." After that, Shiyun sent me a piece of news.
Regarding the impact of the Russia-Ukraine conflict on Chinese freight forwarding, China International Shipping Network and other logistics platforms conducted a survey. The results showed that after the Russia-Ukraine conflict, freight-related costs more than doubled for 23.53% of the companies. 29.41% of enterprises increased by 50%, and about half of the enterprises increased costs by 0-50%.
It is reported that Ukrainian and Russian crew members account for as many as 17% of the world's 1.9 million crew members, and most of them hold high-level positions such as captains, specialists, and chief engineers (people who control ship equipment). There are currently at least 60,000 Russian and Ukrainian sailors stuck at sea or in ports. Crew shortages may become another runaway variable in shipping capacity.
"What has been your deepest experience in the past few years since the epidemic broke out?"
She sighed and said: "Confusion. From the beginning, we have always hoped to regulate freight rates, but to be honest, no. There is no formal document for regulation. Freight rates have increased by more than ten times, which has severely affected our foreign trade business, especially for products that lack technical content. I don’t know what I have experienced in the past two years.”
03 The future is bright and the road is tortuous
The afterglow of dusk shines on the wide sea, the huge bridge crane stretches into the distance, people are carrying out loading and unloading operations nervously and orderly, tens of thousands of containers and seagulls together, Traveling tirelessly between the golden heaven and earth.
Although affected by the epidemic, South China ports, represented by the world's fourth largest container hub port - Shenzhen Port , still shoulder the mission of the motherland's external transportation sea lanes and continuously deliver fresh blood to the global supply chain. .
In order to alleviate the situation of "hard to find a cabin" in shipping, the Shenzhen transportation department is actively cleaning up the backlog at the port under the premise of strictly preventing and controlling the epidemic, coordinating liner companies to reserve space for Shenzhen Port, and operating overtime ships. In March, the average There are 132 ships berthing daily and more than 20,000 trailers entering and leaving the port.
On the other hand, in response to the "ship shortage" phenomenon, buying and renting ships is currently popular. However, once the structural shortage caused by ship congestion in ports such as the "capacity black hole" subsides, excess capacity is likely to occur, and shipping companies should give more long-term considerations.
With the epidemic raging, it is difficult to explain the difficulties faced by South China ports in detail. Finally, I sent the last question to Liang Shiyun, "Do you think it will get better?"
"Be cautiously optimistic."
After all, since the reform and opening up of and , this has been a place where miracles happen.
