Xinhua News Agency, Beijing, September 22 (Reporters Ding Yawen, Li Ting, Wu Huijun) As shipping prices continue to break through record highs, several major liner giants have successively announced the suspension of spot freight rate increases.
Industry insiders analyze that the "freezing of prices" by liner companies may help stabilize shipping prices. However, is this move a "stop-gap measure" under tighter supervision, or is it a bargaining chip intended to raise shipping prices through forward contract prices? How to resolve the conflicts between liner companies and shippers? When will shipping prices reach an inflection point? The reporter interviewed many people from all aspects of the industry chain and learned about the true situation of the current shipping market.
Liner giants announced the suspension of spot freight rate increases
So far, four liner giants have announced the suspension of spot freight rate increases.
Since CMA CGM announced the suspension of spot freight rate increases, the three giant companies, Maersk, Hapag-Lloyd and OceanNet, have also expressed their stance and promised not to increase spot freight rates in the future.
Among them, CMA CGM said in a statement that it would stop all spot freight rate increases. This measure will take effect immediately from September 9, 2021, until February 1, 2022. Hapag-Lloyd said it would not increase spot freight rates further and hoped the market would slowly start to calm down.
Regarding the above-mentioned measures of liner companies, market participants believe that this is an "expedient measure" due to regulatory pressure.
Information came out from the previous Global Shipping Regulatory Summit that shipping prices and container prices have been operating at abnormally high levels, which has attracted widespread attention from global regulatory agencies, legislators and the public.
Yang Jing, director of the Tianjin Shipping Business Technical Service Center, pointed out that in the past, shipping regulatory authorities in various countries had taken some regulatory actions in response to rising freight rates, but there was no synergy. The Global Shipping Regulatory Summit has released a signal of tightening supervision on liner companies.
The impact of high freight costs
It is understood that the previous continuous surge in shipping prices has affected the production and operation of some companies. The selling prices and purchase prices of terminal products of individual overseas customer companies have even been inverted.
The person in charge of a ladder company in Tianjin said that the company uses FOB to ship goods, and the purchasers are generally large foreign supermarkets, which have strong logistics bargaining power. Despite this, customers are also complaining about the increase in logistics costs. The sea freight to the destination has increased nearly five times. The sea freight cost shared by each ladder has almost covered the price of the product itself.
At the same time, the liner giant's profits in the first half of the year maintained a high growth trend. Among them, the group's net profit in the second quarter of CMA CGM rose from US$136 million in the same period last year to US$3.479 billion, a year-on-year increase of 2458.1%; Maersk's profit before interest, taxes, depreciation and amortization in the second quarter reached US$5.1 billion, an increase of 200% from the same period last year. .
When will the turning point of freight prices arrive?
As liner giants have suspended increases in spot freight rates, is it possible that ocean freight prices will reach an inflection point?
A person in charge of a shipping company told reporters, "The liner company has announced that it will not increase prices only for spot freight, and it is currently difficult to book space using spot freight. In addition, the liner company's capacity for next year is basically full."
Yang Jing pointed out that some liner companies have announced a freeze on spot freight rates, which is expected to alleviate the sharp rise in freight rates to a certain extent. However, factors affecting freight rate increases, such as port congestion and insufficient shipping capacity, still exist. And for shippers, shipping costs include not only freight prices, but also various additional charges, such as fuel surcharges, peak season surcharges, etc. Therefore, freezing spot freight rates may not necessarily bring about an inflection point in shipping prices.
At the same time, the labor force at the port has been significantly reduced, and the efficiency of terminal operations has decreased, resulting in a large number of arriving containers being stranded and unable to return on time. This is also an important reason for the continuous rise in international freight rates.
Industry insiders pointed out that although there will be a trend of stricter supervision of liner companies in the future, supervision cannot directly interfere with market prices. It remains to be seen whether shipping prices can reach an inflection point.
