Reporter Sun Lichao reports from Beijing
"In the current container transportation market, a price a day, the price is rising every day, in the morning with the customer to report the price, to determine the order, in the afternoon the shipping company will notify the price increase, we need to update the price to the customer again." A freight forwarder in Jiangsu responsible for Sino-European business told the reporter of China Business Daily.
In this traditional shipping off-season, space is tight, freight rates are soaring, and the off-season is not weak, which has become a key word in the market. According to the data released by the Shanghai Shipping Exchange, from the end of March 2024 to the present, the market freight rate of Shanghai port exports to South American basic ports has increased by 95.88%, and the market freight rate from Shanghai port to European basic ports has increased by 43.88%.
According to the analysis of industry insiders, the improvement of market demand in Europe and the United States, the prolongation of the Red Sea conflict and other factors are the main reasons for the current rise in freight rates. With the arrival of the traditional peak shipping season, the price of container transportation may continue to rise in the future.
European line freight rose by more than 20% in a week
Since the beginning of April 2024, the Shanghai Export Container Comprehensive Freight Index released by the Shanghai Shipping Exchange has continued to rise. According to data released on May 10, the Shanghai export container composite freight index was 2,305.79 points, up 18.8% from the previous week, up 33.21% from 1,730.98 points on March 29, and up 132.16% from November 2023, before the outbreak of the Red Sea crisis.
Among them, South America and Europe routes have the highest increases. The market freight rate (ocean freight and ocean freight surcharge) for exports from Shanghai port to South American basic ports was US$5,461/TEU (20-foot container, also known as TEU), up 18.1% from the previous period and 95.88% from the end of March. The market freight rate (ocean freight and ocean freight surcharge) for exports from Shanghai port to European basic ports was 2,869 US dollars/TEU, a sharp increase of 24.7% from the previous week, an increase of 43.88% from the end of March, and an increase of 305.8% from November 2023.
In an interview with reporters, the relevant person in charge of the shipping business of the global digital logistics service provider Yunqunar Logistics Technology Group (hereinafter referred to as "Yunquna") said that since late April this year, it can be felt that the freight rate of routes to Latin America, Europe, North America, the Middle East, India and Pakistan has risen, and the increase in May has been more obvious.
The Drewry World Container Index (WCI) rose to $3,159/FEU (40-foot container) this week (as of May 9), up 81% compared to the same period in 2022 and 122% higher than the pre-pandemic average of $1,420/FEU in 2019, according to data released by Drewry, a shipping research and consulting agency, on May 10.
Recently, a number of shipping companies, including Mediterranean Shipping (MSC), Maersk, CMA CGM, and Hapag-Lloyd, have announced price increases. Taking CMA CGM as an example, at the end of April, CMA CGM announced that from May 15, the new FAK (Freight All Kinds, unified freight rate) standard of the Asia-North Europe route will be adjusted to 2700 US dollars / TEU and 5000 US dollars / FEU, which is 500 US dollars / TEU and 1000 US dollars / FEU respectively from the previous one; On May 10, CMA CGM announced that from June 1, it will raise the FAK rate for goods shipped from Asia to Nordic ports, with the new standard as high as $6,000/FEU, and another increase of $1,000/FEU.
Global shipping giant Maersk CEO Ke Wensheng said in a recent conference call that Maersk's European route cargo volume has increased by 9%, mainly due to strong demand from European importers to replenish inventory. However, the problem of space crunch also arises, and many shippers have to pay higher freight rates to avoid cargo delays.
While shipping prices are rising, the prices of China-Europe trains have also risen. A freight forwarder in charge of China-Europe trains told reporters that the current freight demand for China-Europe trains has increased significantly, and the freight rates of some routes have risen by 200-300 US dollars, and they are likely to continue to rise in the future. "The price of sea freight has risen, and the position and timeliness cannot meet the needs of customers, resulting in the transfer of some goods to the railway, and the railway volume is limited, and the demand for space will increase greatly in the short term, which will definitely affect the freight rate."
Container shortages are back in the picture
"Whether it is sea or railway, there is a shortage of containers, and some areas have been unable to book boxes, and the cost of container leasing in the market is greater than the increase in freight rates." A person in the container industry in Guangdong told reporters.
For example, he said, the cost of 40HQ (40-foot high cube) on the China-Europe line was US$500-600 last year, and rose to US$1,000-1,200 in January this year, and now it has risen to more than US$1,500, and more than US$2,000 in some areas.
A freight forwarder at Shanghai Port also told reporters that some foreign yards are now full of containers, and there is a serious shortage of containers in China. The price of empty containers in Duisburg, Germany, has risen from $1,450 in March to $1,900 currently.
The relevant person in charge of the above-mentioned shipping business said that an important reason for the sharp rise in container charter fees is that due to the conflict in the Red Sea, a large number of shipowners have detoured to the Cape of Good Hope, resulting in container turnover at least 2-3 weeks longer than the regular time, resulting in the slower liquidity of empty containers.
The global shipping market dynamics (early May to mid-May) released by Dexun Logistics on May 9 pointed out that after the "May Day" holiday, the overall container supply shortage has not improved significantly, and the major shipping companies have different degrees of lack of containers in the main departure ports, especially large and high containers, and some shipping companies continue to strengthen the control of containers on Latin American routes. By the end of June, new containers made in China were fully booked.
In 2021, affected by the new crown epidemic, the foreign trade market will "first decline and then rise", and the international logistics chain will have a series of unexpected extreme states. The return of containers scattered around the world is not smooth, the global distribution of containers is seriously uneven, a large number of empty containers are backlogged in the United States, Europe and Australia, and there is a shortage of export containers from the mainland. Therefore, container companies are full of orders and full production capacity. It was not until the end of 2021 that the shortage of containers gradually eased.
With the improvement of container supply and the recovery of operational efficiency in the global shipping market, there will be an excessive backlog of empty containers in the domestic market from 2022 to 2023, until there will be a shortage of containers again this year.
Freight rates may continue to rise
For the reasons for the recent sharp rise in freight rates, the relevant person in charge of the above-mentioned shipping business analyzed to reporters, first, the United States basically ended the destocking stage and entered the inventory replenishment stage, and the volume level of the transpacific route gradually recovered, which drove the freight rate up. Second, in order to circumvent the possible tariff adjustment of the United States, enterprises going overseas to the American market have taken advantage of the Latin American market, including automobile manufacturing and infrastructure industry, to transfer their production lines to Latin America, resulting in a concentrated outbreak of demand for Latin American routes, and many shipping companies have opened routes to Mexico to meet the growth of demand. Third, the shortage of resources on European routes caused by the situation in the Red Sea has caused a shortage of European freight rates, and European freight rates are also rising from shipping space to empty containers. Fourth, the peak season of traditional international trade is earlier than in previous years. Usually, in June every year, the overseas summer sales season begins, and the freight rate will rise accordingly. This year's freight rate increase is 1 month earlier than in previous years, which means that this year's peak sales season has arrived earlier.
On May 11, Zheshang Securities issued a report entitled "How to look at the recent counterintuitive rise in container transportation prices?" On the one hand, the detour of ships has led to an increase in the transportation distance, and on the other hand, the decline in ship turnover efficiency has led to a tight container turnover in the port, which has further exacerbated the tension in the supply chain. In addition, the marginal improvement of the demand side, the marginal improvement of macroeconomic data in Europe and the United States, and the expectation of rising freight rates in the peak season are superimposed, and shippers prepare goods in advance. Moreover, the U.S. line has entered a critical period of long-term agreement signing, and the shipping company has the power to increase prices.
At the same time, the research report believes that the high concentration pattern of the container transportation industry and industry alliances have formed a price driving force. As of May 10, 2024, the capacity of the top ten container liner companies accounted for 84.2%, and the formation of industry alliances and cooperation between companies will help to alleviate vicious price competition by suspending sailings and controlling capacity in the context of the deterioration of the supply and demand environment, and on the other hand, it is expected to achieve a higher freight rate level through joint price raising in the context of the improvement of supply and demand.
Since November 2023, Yemen's Houthi rebels have repeatedly attacked ships in the Red Sea and nearby waters, and many shipping giants around the world have had no choice but to suspend the navigation of their container ships in the Red Sea and its adjacent waters, and divert their routes around the Cape of Good Hope in Africa. This year, the situation in the Red Sea is still escalating, and the main shipping arteries have been blocked, especially the Asia-Europe supply chain, which has been greatly affected.
For the future trend of the container transportation market, Dexun Logistics said that in view of the current situation, freight rates will remain strong in the near future, and shipping companies have been preparing a new round of freight rate increases.
"Container freight rates will continue to rise in the future. First, the traditional overseas sales season is still continuing, and Europe will host the Olympic Games in July this year, which may push up freight rates; Second, the destocking in Europe and the United States is basically over, and the United States is also constantly raising the country's retail development expectations. With the rise in demand and tight capacity, freight rates are expected to remain rising in the short term. The above-mentioned person said.
(Editor: Hao Cheng Review: Wu Kezhong Proofreader: Zhang Guogang)