"21st Century Business Herald" reporter Hu Guangzhou reported.
Shipping prices have been falling rapidly recently, which seems to indicate the end of the "age of huge profits" of shipping.
September 27, Freights Baltic Container Freight Index (FBX) showed that the global container freight rate was US$4,085/FEU. In addition, freight rates for many domestic export containers have fallen. As of September 23, the China export container freight index (SCFI) was 2475.97 points, down 5.1% from the previous period, including routes such as Europe, East and West America.
July-September in previous years was the traditional peak season for domestic commodity exports. But this year, at this node, freight costs have dropped one after another, showing a phenomenon of "peak season is not prosperous", which inevitably makes the outside world confused.
期2
期大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大大But like this year, it has fallen for 17 consecutive weeks since the beginning of the year and 15 consecutive weeks since the middle of the year. It is indeed rare to see a 60% drop in price in the first nine months. "The last time such a bear market occurred was in 2015, with a cumulative decline of only 43.2% in the first three quarters of that year," he added.
Shipping prices have fallen for several consecutive days, and the decline has even hit a new high. Staff from a freight forwarding company in Tianjin revealed that at the beginning of the year, the price of shipping 40-foot TEU to on the west coast of the United States was around 10,000 yuan, but now it only costs about 3,000 yuan, a decrease of more than 60%.
Although many shipping companies have completed the goal of ordering ships to expand their transportation capacity, they have to make adjustments when shipping prices drop. Data released by shipping consulting firm Drewry shows that in the five weeks from September 19 to October 23, 122 of the 750 scheduled flights on major routes such as Trans-Pacific, Transatlantic Ocean, Asia-Nordic Europe, Asia- Mediterranean were cancelled, with a cancellation rate of 16%.
Zheng Dong Futures Shipping analyst Lan told the 21st Century Business Herald reporter that the expected price decline is ahead of reality, and the price decline is caused by sentiment. Starting in October, liner companies will take measures to suspend flights and maintain prices to alleviate the price downward trend.
What is the reason behind the fall of the shipping price from a high place? When a shipping company expands its transportation capacity and encounters a downward cycle of Shanghai shipping prices, what will its profits be affected?
Shipping prices once fell by 60%. Will the era when shipping companies make hundreds of billions a year end?
(Picture from Shanghai Shipping Exchange)
From "hard to get one box" to "hard to get one item"
In fact, starting from the end of 2021, there are signs of "cooling". But this year, the decline in shipping prices suddenly became rapid.
September 27, the Freightos Baltic Container Freight Index (FBX) showed that the global container freight rate was US$4,085/FEU. You should know that on September 13 last year, global container freight rates soared to US$11,134.44/FEU, and the current freight rates are only equivalent to the level in January last year. According to this estimate, global container freight rates have so far fallen 63% from their highs.
Speaking of the current decline in shipping freight, Zhang Yongfeng, chief consultant of Shanghai International Shipping Research Center , said in an interview with a reporter from 21st Century Business Herald that although international container shipping spot freight costs have dropped a lot from last year's high, overall, they are still higher than the pre-epidemic level. "From the industry cycle, the container shipping market has bottomed out and rebounded before the epidemic, and was greatly affected by the epidemic in the past two years. The current decline in freight costs is also normal fluctuation, which is a relatively rational pullback."
Although many experts interviewed believe that this wave of market is a normal return after the price surge in the early stage, it is still quite rare for the "peak season is not prosperous" and the sharp drop in freight costs.
Zhang Yongfeng said: "In the past, July to October was mostly the traditional peak season for container exports, and export demand was relatively high. But this year's 'off season' was mainly due to the poor performance of foreign demand.”
He further stated that this phenomenon is mainly caused by the following factors: “First, Europe and the United States continue to replenish inventory, and commodity inventory is high. For example, the three major inventory indicators in the United States are at a high level; secondly, in the context of Federal Reserve continuous hikes in , epidemic subsidies have been cancelled, and global liquidity has become tighter. Major economies around the world are deeply affected by the rise in raw material energy prices and high inflation, and consumer demand has been greatly impacted; at the same time, the recovery of overseas production capacity has also reduced the proportion of China's imported goods to a certain extent; in addition, the overall congestion at overseas ports has eased, the turnover rate of ships and the quasi-ship rate have increased rapidly, and the ship loading rate has decreased, which have helped the pullback of shipping prices. ”
In Chen Zhen’s view, factors such as mismatch in capacity supply and demand, tight supply chains, and continued foreign inflation will continue to affect the global container transportation market. He said that even if the shipping market prices further decline in the future, it is normal, because although the current overall freight rate is lower than the same level in 2021, it is still far higher than the same level before 2020.
From the data, in 2019, before the outbreak of the epidemic, the Baltic containers were The global average freight index (FBX) is about US$1,400/FEU. It can be seen that although the current shipment price has dropped, it is still much higher than the price at that time.
Although the shipping freight price has returned to rationality, insufficient foreign demand has become a new problem that many freight forwarding companies are worried about. The person in charge of a freight forwarding company in Guangzhou told the 21st Century Business Herald reporter that the most worrying thing is the continued weakness of external orders. "If the foreign demand problem is not solved, the uncertainty of foreign trade will increase, and the entire container transportation market will be affected. "
medium and long-term shipping market will be at a low point.
2021, due to factors such as supply chain disruption and surge in demand, international freight costs soar. Because of this, many shipping companies unexpectedly ushered in a "highlight moment".
Reviewing the performance of more than one shipping giants in the past year, it can be said that they have made a profit. The financial report of the global shipping giant Maersk Group disclosed that the company's revenue in 2021 was US$62 billion, a year-on-year increase of 55%, and its annual EBITDA tripled to a record $24 billion, setting the highest profit level of Danish companies ever.
is unique, Mediterranean Shipping Company , CMA, Herr Other major shipping companies around the world, such as Beurotte, have also seen their performance soaring. In 2021, 's profit before interest, tax, depreciation and amortization was USD 12.8 billion, a year-on-year increase of 316.1%; Dafei Group's net profit in 2021 increased by more than 900% year-on-year.
According to estimates by shipping consulting company Drewry, the total profit of the container shipping industry in 2019 was only about USD 7 billion, expanded to USD 26 billion in 2020, and in 2021 Soaring to US$210 billion. This figure is expected to rise to US$270 billion in 2022.
relies on record performance, shipping companies have been able to make large-scale deployment of transportation capacity. Take COSCO Airways, a subsidiary of China Shipping Company COSCO Shipping Group , as an example. It is reported that COSCO Airways has placed orders for shipbuilding four times after the outbreak of the epidemic, with new orders reaching 34 container ships and 590,000 The TEU, the expansion scale of capacity is second only to Mediterranean Shipping and Dafei. Among the shipping companies that expand capacity, Mediterranean Shipping has the largest booking scale. Since the beginning of this year, Mediterranean Shipping has ordered and built 42 liquefied natural gas dual-fuel powered container ships this year, worth more than US$6 billion.
At present, new ships ordered by shipping companies have been launched one after another, and the shipping company's capacity will be greatly improved. Transportation company Clarkson predicts that the capacity of the container fleet will grow by 3.7% this year and 8.1% in 2023.
In this regard, Chen Zhen said that many liner companies' new ship orders have been confirmed in the last 1 to 1.5 years. Considering the 1.5-2-year cycle of shipbuilding and the backlog of orders, the new ship may have entered a bear market after launching, so the decision to simply expand production capacity on a large scale is actually debatable.
Zhang Yongfeng also believes that liner companies have increased their capacity in the past two years, and a large number of new shipbuilding orders will be delivered in the next year, which will inevitably have a certain impact on the spot market. "Especially some ship owners who lack stable route network, customer base and ship management capabilities will face greater cost pressure."
finally waited until the new ship was launched, but in the face of the decline in shipping prices, some liner companies had to take measures to stop ships in order to maintain prices. In this case, will the profitability of the shipping company be affected? Zhang Yongfeng believes that due to the high proportion of long-term contracts from the end of last year to the beginning of this year, the agreement price is relatively stable, and the profitability of shipping companies will be relatively stable.
But the long-term contract price and spot price have been seriously inverted. As of September 23, the China Export Container Freight Index (CCFI), which reflects the overall transportation market (including spot agreements and long-term agreements), was 2475.97, down 5.1% from last week, indicating that the coordinated price is inverted with spot prices. Therefore, in the market, some container transport customers tear up long-term agreements and demand new long-term agreements with shipping companies.
"As of August, there were 927 unfinished container ships worldwide, totaling 7.034 million TEUs, accounting for 27% of the current total capacity, 1.4 times the world's top ten liner companies. These new ships will be launched from 2023 to 2025. Moreover, although new shipping environmental protection policies will be implemented starting next year, and some ships will be eliminated or speed limits, it is expected that more countries will relax epidemic control measures and ship turnover efficiency will further increase. Therefore, the supply and demand mismatch of the original transportation capacity will be greatly alleviated, and the market can no longer support the previous high freight rates." Chen Zhen told reporters that the shipping market will be at a low point for a long time, and its performance will be difficult to improve significantly.
lan believes that subsequent freight rate declines are expected to slow down, but whether there will be a rebound depends on whether marginal supply and demand can be significantly improved and whether market sentiment can be repaired. She told reporters that even if sea freight prices rebound, it is only a phased situation. In the medium and long term, the weak freight cycle has become a foregone conclusion.
