General

The transportation capacity of Yantian Port has resumed normal operations, and the delay continues due to a large backlog of cargo. The market is facing various problems caused by cargo backlog, ship delays, port jumps and shortage of space. With the soaring demand, market participants have begun to make long-term preparations for alleviating the current congestion situation, and now every container ship that can sail is very much in demand. The demand for capacity in order to cope with the transportation of a large number of goods around the world means that almost all available container ships have been put into use.

Due to the shortage of capacity, there was another batch of new ship orders last week, including Seaspan, HMM and Wan Hai, which all increased shipbuilding orders. However, none of this will help solve the looming crisis in the container transportation supply chain. Congestion in ports and inland areas is leading to a shortage of available equipment, which continues to affect the development of the troubled container supply chain.

Søren Toft, CEO of Mediterranean Shipping, delivered a speech at the International Ports and Ports Association Conference, calling on ports and carriers to strengthen cooperation to solve this problem. But he warned that more investment is also needed and called for a "long-term strategic vision" for infrastructure investment.

Following the congestion in Los Angeles, Long Beach, and Yantian, ports that are seen as obstructing the transportation of containerized goods have become the main bottleneck and have attracted more and more attention.

CMA CGM said last week that it plans to suspend its South American route in Le Havre for three months due to port congestion and inefficient operations. Prior to this, The Alliance also issued a similar statement, saying that due to the severe congestion in Rotterdam, it was forced to call on 7 voyages to the Port of Rotterdam.

The third quarter will usher in a super peak season, with freight rates skyrocketing

Industry insiders pointed out that since the beginning of this year, problems such as lack of ships, lack of containers, lack of labor, and port congestion have been superimposed. With the unblocking of Europe and the United States in June, the market has entered the traditional peak season, and demand far exceeds the supply of capacity. , Driving the freight rate to skyrocket, it is expected that the SCFI freight index is expected to break through the 4000-point mark this week, driving freight rates to explore new sky-high prices.

With the successive adjustments of freight rates by major shipping companies around the world in July and August, if additional costs such as peak season surcharges, fuel costs, and cabin purchase fees are included, the current freight rate from the Far East to the East of the United States can reach US$15,000-18,000/ The FEU and Western US routes have also exceeded US$10,000/FEU, and the freight rate of the European routes is about US$15,000 to US$20,000/FEU.

Analysts said that since the Suez Canal congestion at the end of March this year, European port congestion has further intensified, and the closure of Yantian Port and its nearby ports due to the epidemic has made it even worse. Although the Yantian Port has resumed normal operations, it still cannot be fully digested in the short term, and the congestion situation in the US port has not improved so far. The third quarter of this year is expected to usher in a super peak season for container shipping companies.

The American Retailers Association estimates that as retailer inventories are still at a low point in the past 20 years, the strong demand for restocking will continue to push up the freight rate.

Consulting firm Hackett Associates is optimistic that the U.S. container imports will reach more than 29 million TEU in 2021, a substantial increase of 14.5% over 2020. This move will benefit Asian producing countries such as China, Japan, and Vietnam. The United States’ imports from mainland China will increase by 51.5% annually, and imports from other parts of Asia will increase by 44.5%.

The liner company will make up to 100 billion U.S. dollars in profits this year

Drewry currently predicts that the container shipping industry will achieve a record profit of 80 billion U.S. dollars in 2021, higher than the previous forecast of 35 billion U.S. dollars. If the freight rate exceeds expectations for the rest of the year, Drewry said that the annual profit line of 100 billion US dollars is not impossible, which will be more than three times the highest liner record in history.

The British consulting company pointed out: "2021 will be the first time in the history of container shipping. In the context of huge operational disruptions in ports and shipping systems, carrier profits will approach 100 billion U.S. dollars and average freight rates will increase by 50%."

Drewry predicts that from the peak season to the end of the third quarter, container volume will continue to grow and end the year with an annual growth rate of approximately 10%, consolidating a record year for the industry.

As far as 2022 is concerned, Drewry said that there will still be growth, but with the lifting of epidemic-related restrictions, it is expected that consumer spending will shift to the service industry, and the growth may be only about half of that. For 2022, Drewry expects EBIT to fall by more than one-third due to weaker freight rates and rising costs. As many carriers lock in expensive long-term contracts, costs may remain at a higher level for a longer period of time.

Lars Jensen, CEO of Vespucci Maritime, a container consulting company, studied the $100 billion profit figure proposed by Drewry and believed that container shipping would make up for 20 years of losses within one year.

The cost of transportation between China and East Europe continues to rise

Since October last year, ocean shipping prices have risen abnormally, and there is no sign of decline. In addition, the problem of container delays is extremely serious. Many ports are facing a shortage of workers, and the processing time for containers is longer than usual. Container ships may experience a delay of 2-3 days each time they enter the port, which may increase the voyage by as much as 10-15 days.

According to the manager of a Jining company specializing in ginger trading and export, “Under normal circumstances, the journey from Shandong to Moscow should be only about 45 days, but due to low loading efficiency, the journey slows down to 60 days. As for the price, it used to be around US$3,000 each. Containers are now as high as 9,000-10,000 U.S. dollars per container." "The price of land transportation to Russia is also increasing. The current price of land transportation is around 4,000-5,000 U.S. dollars per truck. When the price of overseas transportation began to rise in October last year, Many exporters are turning to land transportation."

Write at the end

The world's industrial chain relies on China's supply, and the trade deficit has increased; China's ports continue to be in short supply of containers, the operation efficiency of the destination port is low, and the supply chain cannot operate normally. The situation in the maritime market will cause further tensions in air and rail services.