html On September 9, CMA CGM of France, the world's third largest shipping company, stated that from now until February 1, 2022, the spot freight rates of all its subsidiaries will stop increasing.
html On September 13, Maersk, the world's largest shipping company, and Hapag-Lloyd, the fifth largest shipping company, also successively stated that they would "no longer increase freight rates." Hapag-Lloyd said: "Spot freight rates have peaked and freight rates will not increase further."
Since 2021, affected by factors such as port congestion and a serious imbalance between demand and container ship capacity, container shipping spot freight rates have continued to rise. . While these market-driven rates are expected to continue rising in the coming months, shipping majors have announced a pause in rate increases. This may seem like a loss of short-term interests, but it actually benefits long-term interests.
1. Shipping prices remain high, triggering great regulatory attention
Against the background of excessive demand for container shipping and tight supply of shipping capacity, the BDI index has continued to rise since 2021, with the highest rise to 4235 points on August 27, the highest level in the past 11 years. new high. On September 14, the BDI index once again exceeded 4,200 points, and shipping prices remained high. Correspondingly, China's import and export container freight index also surged rapidly in 2021, exceeding 3,000 points and approaching 1,500 points respectively in September, which are the highest points since the index was established.
(Source: Flush)
(Source: Flush)
In the short term, market supply will continue to exceed demand, and shipping prices are expected to remain high or rise further. At the same time, the continued increase in shipping prices and container prices will be transmitted to various industrial chains, exacerbating the chaos in the global supply chain.
The continued fermentation of this situation will inevitably attract the attention and concern of regulatory agencies in various countries.
Just before shipping giants such as CMA CGM issued their price limit announcements, on September 8, the Ministry of Transportation of China, the United States Maritime Commission and the European Union held a "Global Shipping Regulation Summit". In addition to the regular discussion of the supply and demand analysis of international shipping and the difficulties faced, the meeting focused on the measures that relevant jurisdictions and regulatory authorities should take to get the shipping industry back on track in response to the aforementioned incidents. In addition, according to people close to the regulatory authorities: "Now the transportation regulatory authorities are also paying close attention to the issue of rising container freight rates."
Han Jun, chief analyst of CITIC Construction Transportation, said that the current market supply and demand situation has not been effectively improved, and the invisible Price limits will lead to government controls similar to real estate prices, leveling the price system, and regulatory pressure and possible subsequent forced price reductions may be the main reason why shipping giants choose to limit prices in advance.
In this regard, Huo Jianguo, vice president of the China World Trade Organization Research Association, also said that the statements of these shipping companies mean that global shipping prices will tend to be relatively stable.
2. Under the price limit, what are the shipping giants planning?
Under the price limit, shipping giants still make profits, that is, by signing additional fees or long-term agreements, and using a multiple price system to determine the profit margins of shipping companies.
First of all, the current high spot market prices are essentially the result of the mismatch between supply and demand. Even if shipping companies freeze freight rates, they will still support freight rates in the context of high demand and limited supply. Moreover, the fourth quarter is usually the traditional off-season for the shipping industry, and freight rates tend to be cheaper than those in the third quarter. Therefore, even if the current freight rates are frozen, they will still be at a high level. In this regard, a person in the freight forwarding industry pointed out: "CMA CGM's freight rates are originally very transparent. Many cargoes are booked through the website. Unlike some shipping companies, old customers can also seek more favorable transportation conditions through the business department. Because the company The space in October has been booked, and it is meaningless to push for price increases. "
Secondly, the container transportation market price system is relatively diverse, including annual long-term agreement freight rates, annual long-term agreement freight rates + additional, and spot freight rates. and freight forwarding quotation (from low to high). Against the background of frozen spot freight rates, there is still room for profit growth of shipping companies.In terms of surcharges, according to a CMA CGM business person: "Although freight rates are frozen, CMA CGM is still able to charge other surcharges. The actual transaction price is subject to loading and loading, and the charges still depend on the market supply and demand mechanism. . ”
Furthermore, shipping companies are more inclined to sign long-term contracts with customers than signing short-term spot freight agreements. It will be great for shipping companies if they can sign long-term agreements of one year or more at the current price. Guaranteed future profit margins. In a market where supply and demand are imbalanced, shipping giants freeze freight rates to gain customer approval and focus on negotiating long-term contracts to lock in high prices for a longer period of time. In the short term, whether it is the signing of attachment terms or the increase in annual long-term freight rates, it will provide an increase in profits, making short-term profits fill the long-term profit space.
Finally, it is assumed that all shipping companies in the market have stopped the increase in spot freight rates, thus allowing some of the demand suppressed by high freight rates to return to the market, forming incremental demand, that is, incremental profits.
Conclusion
Based on the above, the price limit statements of shipping giants are nothing more than trading time for space under regulatory pressure, that is, freezing spot freight rates in exchange for profit margins in long-term agreements. At the same time, from an investment perspective, the stock prices of shipping companies have shown signs of being indifferent to spot freight rates, and the expectation of an increase in long-term freight rates will become the main driving force for a new round of increases.
(Source: flush )
