The skyrocketing freight is finally about to brake?
The skyrocketing freight is finally about to brake? The port is heavily blocked, empty containers continue to be in short supply, and shipping costs have tripled! At least 37% of containers worldwide are delayed!
In 2020, foreign trade experienced a trend of first decline and then rise. Foreign trade business was weak in the first half of the year, but quickly recovered in the second half of the year, reaching a hot state, exceeding market expectations. The throughput of various domestic ports frequently hit new highs. There are orders, but containers are hard to find. This situation has continued until after the start of this year.
Due to the epidemic situation abroad, many routes have not been restored, and large ships are still not enough. The congestion in the port also affected the return of empty containers, and the boxes remained unsettled. However, the skyrocketing freight rate seems to have reached the ceiling. The latest news is obviously not the news of a big increase, but a slow increase. However, it will take some time for the freight to return to normal levels.
At least 37% of containers worldwide are delayed!
The shortage of empty containers has caused shipping costs to triple!
According to the analysis of consulting company Ocean Insights, the container shipping industry has suffered unprecedented supply chain challenges. Freight delays have reached the highest level in history, and at least 37% of containers worldwide have been delayed.
According to Ocean Insights data, freight delay statistics show that overheating has caused serious damage to the market. The delay rate of major ports increased sharply in December, and delays of most major shipping companies are increasing.
The latest data from Ocean Insights shows that from November to December last year, freight volume did not decrease like historical seasonality. Instead, freight volume at most major ports was increasing.
In turn, this has forced further delays in cargo. According to Ocean Insights analysis, more and more cargoes are staying on the docks. Among the cargo carried on each route in the world, the proportion of ships leaving the port that is different from the original plan. The original plan was more. This also directly led to a shortage of containers.
The shortage of containers and the recovery of consumer demand have driven sea freight prices soaring, and the transportation cost of the China-Europe route has tripled to a record high.
The shortage of empty containers caused by the epidemic has disrupted global trade. In the past eight weeks, the cost of transporting goods from China to Europe has more than tripled and hit a record high.
Data from shippers and importers show that the freight for 40-foot containers from Asia to Northern Europe has risen from more than US$2,000 in early November last year to more than US$10,000 today. Lars Jensen, CEO of the consulting firm Sea-Intelligence, said: "This is a bottleneck problem... The main reason for the price increase is the competition between customers for a limited number of containers."
In the first half of 2020, due to the global quarantine caused by the new crown epidemic, global trade suddenly slowed down. Shipping companies cancelled hundreds of liner voyages and thousands of empty containers were stranded in Europe and the United States. In the second half of 2020, when Western countries’ demand for Asian-made goods rebounded, the competition among cargo owners for available containers pushed up freight rates.
John Butler, Chairman of the World Shipping Council (WSC), said: “The volume of freight has dropped from a cliff to the highest level in history. Now the freight volume that the terminal can effectively handle has exceeded the original design limit.” He added that the congestion of the port has caused prices to rise, and shipping companies charge additional fees to compensate for the delay of ships.
Since November last year, the cost of shipping to Europe has skyrocketed due to the shift of more containers from European routes to trans-Pacific routes. In contrast, since the Ministry of Transport of the People's Republic of China in October last year asked shipping companies to stabilize freight rates and increase capacity, ocean freight from China to the United States has basically stabilized.
Philip Edge, chief executive of Edge Worldwide, a British freight forwarding company, said that the freight owner currently pays $12,000 for each container, which is much higher than the October freight rate of about $2,000.
The British Household Appliance Manufacturers Association said in a statement that members of the association reported that since the beginning of 2020, transportation costs have increased by as much as 300%, including "the increase in transportation costs is greater than the retained profits of the goods, so these costs must be passed on to the end user "The situation. The company said: "Manufacturers are expected to be unable to absorb the substantial increase in freight. "
The skyrocketing freight is finally about to hit the ceiling?
According to The Loadstar report, from the data point of view, since January 15th, the Shanghai Export Container Freight Index (SCFI) has only risen slightly by 0.5% in the past week to 2,885 points. The spot freight from Asia to the Mediterranean remains basically unchanged. TEU remained at around US$4296.
Spot freight rates on the Asia-Europe route are also showing signs of cooling. After the Nordic route has soared by US$650 from the previous two weeks, it has now fallen slightly by US$39 to US$4413 per TEU. For the Asia-US route, relevant government agencies have intervened in freight control since September 2020. After that, SCFI's performance has been steady, and the spot price has risen slowly for two weeks.
However, compared with the same period in 2020, the SCFI has risen by 1.9 times. Since the beginning of 2021, the SCFI index has risen by US$590 in just two weeks. Compared with the same period in 2019, the price per TEU of the SCFI index in Northern Europe was only US$1,010, and that of the Mediterranean region was US$1,180.
Today is not what it used to be, and the current increase in container freight rates in Asia and Europe is as high as four times. Moreover, the SCFI index does not include the mid-way expenditures of transporters arriving at the terminal recipients. Once incorporated into the calculation, freight costs will further increase a lot.
Why did the cooling rumors suddenly appear in the shipping market, which still seems to be in full swing? In fact, due to the significant increase in freight costs for exports from China, some customers say that their products are no longer favored by the market and have to be removed.
Increasingly high and amazing quotations have been overwhelming for customers. Therefore, some transport companies said that their customers have decided to suspend the space for container ships. The reason is that customers are unwilling to bear additional transportation costs. In addition, the extended lockdown measures in Europe have brought difficulties. Certainty, customers also worry about the current high inventory.
However, for the majority of cargo owners and forwarders, the reality is far less optimistic. According to estimates by Drewry and Clarksons, the growth rate of shipping demand in 2021 is greater than the growth rate of supply; Alphaliner predicts that the recovery of the shipping market will be more moderate in 2021 due to the rebound in demand in the second half of 2020. A large amount of demand is still "waiting to be fed", and it is difficult for the hot freight price to drop sharply in the short term.
Although the freight rate is expected to drop after the Lunar New Year in mid-February, the freight rate of Asia-Europe shipping should still be maintained at around US$6,000 per 40-foot container.
The trans-Pacific container shipping rate will be slightly retreated in the last week of 2020 and is lower than the previous week. However, some shipping companies still announced that the basic freight rate per 40-foot container will increase by US$1,000 from 2021, and other operators will also Follow up and increase after mid-January.
Some European shippers said that if the carrier requires higher freight prices, it should improve the quality of service, including reducing the movement of goods between different ports, improving the availability of empty containers, increasing the on-time rate and scheduling reliability.
However, the current situation is that the on-time rate of major ports in Europe, America and Asia has dropped to the lowest level in history, port congestion is serious, and the problem of shortage of empty containers cannot be solved quickly in the short term. The global shipping industry will continue to struggle in chaos. Row.
