General

Colorful containers are stacked neatly on the dock, one layer after another, with a towering shore bridge and a blue harbor in the background. Those neatly stacked six or seven layers are all empty boxes. Heavy boxes containing goods cannot be stacked that high, "said an industry insider at Yangshan Deepwater Port in Shanghai.

One morning at the end of March, the reporter traveled by car through the empty container transportation center located at Yangshan Deepwater Port. This is a container yard covering an area of 450000 square meters, stacked into six or seven layers of empty containers to form a matrix. Cars driving between the matrices seem to be crossing a container forest. Boxes of different colors belong to different shipping or leasing companies, with the earthy yellow representing Mediterranean shipping and the dark gray representing Maersk The green one is Evergreen... "The cyclical changes in the container transportation industry are too great! When the empty container transportation center opened in 2021, the shipping market was' one box is hard to find ', and we hope to attract more empty containers to return. Now that times have changed, this place has played a role as a' reservoir ', and the current number of empty containers stacked is about 370000 standard boxes." said the staff in charge of the project.

Empty container accumulation is not a endemism phenomenon of Yangshan deep-water port. In other major ports around the world, such landscapes can be seen everywhere. At Long Beach Port on the West Coast of the United States, "empty containers are piled up six layers, and trucks waiting to be transported are filled with highways leading to the dock," an American newspaper described at the end of March. According to container trading platform Container xChange, since the beginning of this year, the CAx (Container Availability Index) of 40 foot containers in Shanghai Port has always been above 0.6, and ports such as Singapore, Los Angeles, and Hamburg have also been above 0.7 or 0.8. If the value of CAx is greater than 0.5, it indicates an excess of containers, and long-term excess will result in accumulation.

What does a large accumulation of empty boxes indicate? Has international trade stagnated? To unravel this mystery, the reporter interviewed various parties in the container shipping chain - exporters, shipping companies, freight forwarding companies, container manufacturers, truck drivers, and ports. The reporter's investigation found that the phenomenon of empty container accumulation is not so much a reflection of the drastic change in import and export of international trade as a correction of the three-year shipping turmoil of the COVID-19 epidemic. Compared to the peak in February, the current number of empty containers stored at Yangshan Deepwater Port has decreased. Many interviewees said that in March this year, the business basically returned to pre pandemic levels. A freight forwarder said, "The extremely high profits during the epidemic years were all additional, with ups and downs and peaks and valleys." The crazy moment in the shipping industry has passed, leaving these empty boxes waiting for time to digest.

The combination of multiple factors leading to excess container liquidity

One afternoon at the end of March, it was drizzling, and truck driver Meng Fansheng sat in the driver's cab, occasionally glancing at the order platform on his phone. His truck was parked next to the highway on Yangshan Island, with many of the same trucks parked in front and behind. They are all waiting for the next job.

Meng Fansheng's job is to transport goods in containers from factories in the Yangtze River Delta to Yangshan Deepwater Port, unload them, and then load empty containers to the next factory for loading. Generally, a one-way trip of two to three hundred kilometers can be done once a day. He said that it has been difficult to do business since the second half of last year. "There are orders on the platform, but the prices are too low to do it. His bottom line is 600 yuan, which means that after completing a single task, he hopes to have an extra 600 yuan in his pocket when he comes home at night, which is gross profit. If it's less than 600 yuan, you'll lose one order at a time. This car is stationary, depreciated, insured, and maintained, and costs three to four hundred yuan a day

Meng Fansheng is the ultimate link in the global logistics network, and the price pressure he feels is similar to other links in the industry. According to data from freight platform Freightos, the rate for shipping from China to the West Coast of the United States at the end of March last year was $15600 per TEU, while the price at the end of March this year was $1006 per TEU, which is approximately 1/15 of what it was a year ago.

Behind the price changes is the trade-off between supply and demand - in the past three years of the epidemic, shipping companies have continuously increased their capacity and ordered containers. Now, the turnover efficiency of the shipping industry has returned to normal, ships and boxes are no longer stuck on the road, and the problems of excess capacity and empty container accumulation have become prominent; On the other hand, during the epidemic, merchants hoarded more goods, resulting in a decrease in foreign trade demand since the second half of last year. Taking Nike as an example, the company recently stated that it has reduced its inventory growth rate from 40% in the past quarter to 16%, and will continue to reduce purchases from suppliers in the future. Compared to the previous quarter, Nike reduced inventory by approximately $400 million. Strategic management of excess inventory is a top priority this year, "said company finance officer Frand.

Zhang Yi, Vice President of Greater China for Global International Freight Forwarding (China) Co., Ltd., believes that excess inventory and container accumulation should start from 2021: "In 2021, due to the epidemic, many ports were congested with cargo ships, and cargo could not be unloaded, resulting in goods missing the Christmas sales season of 2021 and becoming inventory. By Christmas 2022, orders that were supposed to be placed were no longer placed, and the goods were much less

In addition, during the epidemic, people generally work from home and spend heavily on goods such as laptops and household items; After the epidemic, expenses for such goods decreased and tourism expenses increased. This increase and decrease have also led to a decrease in demand for container freight. There are fewer goods to be transported, so there are naturally more empty boxes.

Zhang Yi pointed out that another important reason for the accumulation of empty containers in major global ports is the excessive production of containers during the epidemic. According to Drewry, a shipping consulting company, more than 7 million containers were produced globally in 2021, three times higher than in regular years. In 2021, the container sales of CIMC Group, a leading container manufacturing enterprise, were 2.5 times higher than the previous year. CIMC Group wrote in its 2021 financial report: "Our container production and sales reached a historic high, with significant year-on-year growth in operating revenue and net profit

The person in charge of container management in Maersk Greater China said, "Almost all participants in the market, including shipping and logistics companies, freight forwarders, and container rental companies, are investing in container manufacturing. In the past two to three years, the total number of new container manufacturing in the entire market has far exceeded historical data." However, Maersk did not disclose the specific number of container manufacturing by the company. The return of empty containers further increases the stock of domestic port containers. Shipping companies need to continue transporting a large number of empty containers back to Asia, as this is the main export destination for global goods. In addition, the Asian region has a large storage space for empty containers and low costs, resulting in a significant return of empty containers.

The combination of multiple factors has resulted in excess container liquidity. The extra boxes will definitely be seen in some places, "said Zhang Yi.

It's not that there's no job, it's because profits are low, and it's back to normal levels before the pandemic

From March 1st to March 23rd, Meng Fansheng ran a total of 167 orders, with a gross profit of approximately 10000 yuan and an average of 600 yuan per order - which is exactly his bottom line. When the market is good, one order can earn 1200 yuan. "Meng Fansheng referred to" good times "as 2021. It is said that many people in the industry "made ten years of money" that year. My own record is that I worked continuously for 106 days. At that time, as long as I wanted to work, there was work every day, "Meng Fansheng said.

Recently, he has been working for almost a day or two and has been off for one day, not without work, but with a low quotation. When the reporter saw him, it was already his third day at Yangshan Deepwater Port. Not receiving a new order immediately after the first day of delivery; The next day, the price of the order was too low and he didn't take it; In the blink of an eye, it was the afternoon of the third day, but the price offered on the platform had not yet reached his psychological level. Wait a little longer, usually the quotation will go up by 3pm. "He looked at the time, and there was still over an hour before he suddenly shook his bottom line of 600 yuan

Meng Fansheng is 52 years old and came to Shanghai from his hometown of Henan in 1997 to work hard. At the Waigaoqiao dock, I initially "picked up containers" (unloading the goods inside the containers), but later saw a fellow villager opening a container truck on the dock, so I switched industries and opened a container truck. Over the years, three cars have broken down, and now it's the fourth one.

In 8 years, Meng Fansheng is about to retire because the A-photo of the Kaiji card automatically expires when the driver is 60 years old. In the last eight years, he still wants to work harder for his family. Looking at the empty containers piled up at the ports, he sometimes thinks of the 2008 global financial crisis, when the container truck business was as difficult as it is now, but the recession caused by the financial crisis soon ended. He hopes that the impact of the epidemic will soon pass.

In addition to receiving orders on the platform, Meng Fansheng often directly receives orders from familiar freight forwarders. A freight forwarder is the intermediary between the cargo owner and the shipping company, responsible for booking, customs clearance, and dispatching to truck drivers like Meng Fansheng.

Ma Lei is a business manager of Tianjin Youtong International Freight Forwarding Co., Ltd. As an intermediary in the international logistics chain, he personally feels the warmth and coldness of the shipping industry. His judgment on business is similar to that of Meng Fansheng. He believes that there is not a lack of work now, but a decrease in profit margins. In February, he made more than 70 standard boxes, and in March, he made more than 100. The quantity is similar to before, but the profit has decreased. In the years of the epidemic, it was easy to earn a gross profit of a few hundred dollars per box, but now it's difficult to earn even a few tens of dollars. However, he admitted, "The high profits of the first two years were additional wealth, and now they have returned to the normal level before the epidemic

Ma Lei's intuitive feelings are basically in sync with macroeconomic data. Customs data shows that China's international trade import and export volume (in US dollars) increased by 1.3% year-on-year in February. Among them, international trade imports increased by 4.2% year-on-year, ending the four consecutive months of year-on-year decline; Although exports have decreased by 1.3% year-on-year and the growth rate is still negative, the decline has significantly narrowed compared to the past three months.

On March 20th, Yu Jianhua, Director of the General Administration of Customs, introduced at a press conference that during the epidemic period, China's exports of epidemic prevention materials and "residential economy" products increased significantly, raising the foreign trade base. After calculation, if one-time factors are excluded, the import and export growth of international trade in the first two months of this year exceeded 10%. Overall, the opening was stable and the trend was positive.

One proof of the positive trend is the recent increase in various exhibitions. As soon as the interview is over, Ma Lei will go to the National Convention and Exhibition Center (Shanghai) to participate in a textile exhibition. Developing new clients is his recent task.

The downturn in the shipping industry is bad news for some people, but it may be good news for others. At the Pan Pacific Ocean Shipping Conference held in Long Beach, California in February, upstream and downstream shipping discussed the new year's contract rates. According to attendees, this year's rates have decreased by one-third compared to last year. The container shipping industry has transformed from a seller's market to a buyer's market. Zhang Yi said, "High freight rates have eliminated some of the trade demand, while low freight rates will give rise to some of the trade demand." The empty containers piled up in the port are ready for potential new demand in the future.

On a sightseeing platform at Yangshan Deepwater Port, you can overlook the panoramic view of the dock. Standing here, I heard a mechanical ensemble: the roar of the tire crane moving, the low noise of loading and unloading containers on the quay bridge, and the roar of trucks passing by. Port staff said that as we enter March, the sound here is getting louder and louder.