General

Shipping costs between China and the United States have fallen sharply, mainly due to the approach of the off-season and the reduction in China's manufacturing capacity, and "speculators" are eager to sell the stock of storage space. Although the spot freight rate has dropped, the long-term freight rate has not changed. The future freight rate will depend on the gap between supply and demand.

In the past week, ocean freight rates, which have risen for 15 consecutive months, have fallen sharply.

According to a report by Nikkei, an executive of a Shanghai-based freight company said that in the past four days, the freight for a 40-foot standard container from China to the west coast of the United States has dropped from about US$15,000 to just over US$8,000. This dropped by nearly half, while freight to the east coast dropped from more than US$20,000 to less than US$15,000, a drop of more than a quarter.

Some analysts said that the shipping company did not actually announce a price cut, and that freight forwarders at all levels have dumped space is the main reason for the sharp drop in ocean freight.

At present, five of my country's 12 routes have experienced a decline in freight rates, while other routes are still rising. Under the global supply chain crisis, is the decline in freight rates just a "fake"?

Freight forwarding sells spaces and shipping companies have not announced price cuts

The Nihon Keizai Shimbun pointed out that shipping costs between China and the United States have fallen sharply because the off-season is approaching the superimposed decline of China's manufacturing capacity, and "speculators" are eager to sell the stock of storage space.

The ocean freight before the epidemic is usually between 1500-2000 US dollars. American consumers are affected by home restrictions and buy durable goods including fitness equipment and furniture. At the same time, the shortage of global container supply and serious congestion in various ports have caused soaring sea freight and triggered speculation by scalpers.

As the supply chain crisis intensified, leading global shipping companies such as CMA CGM, Maersk, Hapag-Lloyd, and Ocean Network have announced that they will suspend the increase in spot freight rates, but they have not indicated that they will reduce prices.

Mason, one of the largest container shipping companies in the United States, said that the long-term freight rate for 40-foot containers shipped from China to the West Coast reported by the company to the Shanghai Shipping Exchange on October 2 increased by $200 from a month ago.

According to reports, from the introduction of containers to the market, middlemen continue to change hands to push up the price of containers. When a container reaches the enterprise terminal, at least three or four middlemen must raise the price.

In addition, with the implementation of production restrictions, the production capacity of enterprises has declined and transportation demand has fallen. Freight forwarders dumped their hoarded containers one after another, leading to a drop in freight rates.

On October 2, Yang Daqing, an expert member of the China Federation of Logistics and Purchasing, said in an interview with the Red Star Capital Bureau, “Since August, especially in late September, many provinces and cities have introduced measures to limit power consumption under the dual control of energy consumption. , Resulting in a decline in the production capacity of production enterprises, and a certain degree of decline in transportation demand."

Will sea freight be "fake"?

There are currently 12 major export routes in my country. Compared with the previous period, the freight rates of 5 routes fell, but the freight rates of other routes were still rising. The South Korean route and the Australia-New Zealand route increased by 8.5% and 8.1% respectively.

Spot shipping is different from long-term shipping. An analyst at Tianfeng Securities said that long-term freight rates are often set by shipping companies, but spot freight rates are actual market prices determined by supply and demand. Many of the long-term rates listed by the Shanghai Shipping Exchange for shipping a 40-foot container from China to the United States are less than US$5,000, which is much lower than the spot price.

Analysts have different opinions on how shipping fees will develop in the near future.

Prediction 1: As export growth is expected to slow in the fourth quarter, and the fourth quarter is the off-season for ocean shipping, freight rates will fall.

However, a research report stated that US ports are still crowded and the gap between supply and demand is still large. Shipping freight rates will remain at a relatively high level in the next two weeks.

Prediction 2: Systemic supply and demand tensions are increasing. The process of supply-side mitigation will be relatively long. At present, the problems of U.S. terminal and inland turnover are still severe. Under the influence of repeated epidemics, dock workers, crews and other risk events, subsequent supply chain bottlenecks may intensify. Only when the demand is trending and drastically falling, the downward inflection point of freight rate may appear. The driving force of this round of container transportation demand is European and American import demand, which is still very strong from the perspective of various forward-looking indicators.

At the same time, although spot freight rates may drop in the next two weeks, as US retailers place a new round of orders to meet holiday demand, freight rates will be pushed to record highs.

It is worth mentioning that, in less than two months will be Black Friday in the United States, and American consumers will start Christmas shopping. But the US retail industry is still threatened by supply chain disruptions.

In order to cope with the shortage of supply in advance, Richard Galanti, chief financial officer of the largest chain membership-based warehouse vending store in the United States, said that some key products have been restricted, such as toilet paper, tissues, bottled water and those in high demand. Cleaning products etc.