The year of the maritime industry's big test: high freight rates and unrefundable port congestion waiting to be solved
Our reporter Jiaoyue Shi Lu Li Qiaoyu
Unbalanced supply and demand, lack of containers and cabins, and port congestion...make the maritime industry in 2021 a complete fire.
Talking about the fluctuations in shipping prices this year, Zhang Yu, managing director of Hidden Mountain Capital, told a reporter from the Securities Daily: “China has better control of the new crown pneumonia epidemic, ensuring the normal production and manufacturing, coupled with the increase in overseas demand and the shortage of sea crews. It is difficult to book space for China-Europe and China-US routes, and the problem of container return caused by congestion in overseas ports has made it difficult to find a container by sea."
Affected by the epidemic, the shipping industry container market has frequent transportation chain problems.
From insufficient capacity to port congestion, to the lack of land truck drivers, and the poor connection of various transportation links, it has not yet been successfully resolved.
There are various forecasts in the industry as to when shipping prices will cool down.
Liu Dawei, deputy general manager of Changjiu Logistics, believes: "The increase in shipping prices is a temporary phenomenon. As the supply chain gradually recovers, it will take about three years for prices to return to normal."
Multiple factors cause high sea freight prices
December was originally the off-season for the shipping industry, but the off-season in December this year is not low.
"Securities Daily" reporters recently saw a large number of containers waiting to be loaded at the Yangshan Deepwater Port, 101.5 kilometers away from the center of Shanghai.
In this regard, Manager Cui of Shanghai Tianlu International Shipping Agency Co., Ltd., who is waiting to book cabins at the port, told reporters: "The price of shipping has continued to be high in the past year, and the super cycle has brought many orders to the upstream and downstream of the industrial chain."
Another port person told reporters: "Now, there is no off-season in the maritime industry, and a large number of containers can still be piled up in the port. However, container trucks are being transported one after another, and the port is operating normally."
Looking back at the shipping industry this year, first the Suez Canal was blocked in March, and then Yantian Port was severely congested in May. Then, in August, the Meishan Wharf of Ningbo Port was closed for two weeks due to an outbreak.
The closure of ports in many countries has aggravated the tension of containers and spaces, and the price of shipping has risen again and again.
In terms of shipping prices this year, the US routes have the highest freight rates.
A freight forwarder revealed to reporters: "The third quarter of each year is usually the peak season for shipping. This year's hot market has pushed the shipping price to a peak. Some freight forwarders have called the freight rate of China-US routes to 20,000 U.S. dollars."
The freight rate on European routes has also risen sharply. Liu Dawei told reporters: "The freight rate for a container to Germany was originally US$3,000, but this year it has risen to a maximum of US$14,000."
The freight rates of other routes also increased to varying degrees.
Hua Guangyu, CEO of Muchen International, a cross-border e-commerce platform, told a reporter from the Securities Daily: “Even at the lowest level this year, shipping prices have increased by 30% to 40% compared to last year. Brazil’s routes have increased by 10 times. ."
Regarding the skyrocketing freight rates, some people in the shipping industry analyzed to reporters: "There are many factors involved in the increase in freight rates. For example, freight forwarders raise prices, the cost of container and ship wear and tear caused by queuing at the port increases, and the container handling costs caused by jumping into ports, etc. The increase in surcharges is the reason for the huge increase in freight rates."
"In addition, in order to alleviate the shortage of containers, some ships returned to the country with empty containers before loading, which increased transportation costs and caused freight rates to rise due to the superposition of various costs." The person added.
Foreign trade companies do everything possible to reduce costs
In the face of rising freight rates, foreign trade companies clamored that they could not afford it.
A person in charge of the mobile e-commerce platform told the "Securities Daily" reporter: "After the shipping price rises, we have to adjust the selling price of the goods, otherwise we will lose money." He also revealed: "Most of our goods are shipped by sea. When going abroad, very few are transported by air or land. If the price of ocean freight cannot be lowered, it will be difficult to break the situation of increasing revenue but not profit in the future."
Although some companies choose air freight and European trains, they are still more inclined to sea freight for foreign trade companies.
It is reported that some small cargo owners in foreign trade have adopted the method of consolidating and combining containers to save costs, while large cargo owners and agents have thought of chartering ships.
However, the high costs brought about by the increase in freight rates have caused foreign trade companies to face meager profits or even losses.
A secretary of the board of directors of a listed A-share trading company told a reporter from the Securities Daily: “The most cost-effective way is to transport tens of thousands of tons of containers. Due to the congestion of overseas ports, the uncertainty of return time has increased, so we The European train has been opened, but the quantity of goods transported in this way is limited, and there are no more imported goods to load on the return journey, and the cost of one trip is still relatively high."
The person also said: "Some European and American orders will not be increased due to the increase in freight rates. Even if we do not accept them, many foreign trade companies in Southeast Asia can accept them. In order to save costs, we can only open factories in Southeast Asian countries where labor is cheap. Part of the cost is hedged appropriately."
There are many problems in the management of shipping prices
Faced with soaring freight rates, many countries have begun to take measures to intervene.
On September 8, maritime regulatory agencies from China, the United States and the European Union held the Global Shipping Regulatory Summit.
FMC Chairman Daniel Maffei talked about the "extraordinarily high operation of shipping prices and container prices" at the meeting.
After that, many of the world’s top ten shipping companies, including CMA CGM, Maersk, Hapag-Lloyd and many others, responded not to increase prices, and shipping prices began to fall sharply. Even on the most popular China-US route, the price dropped to $9,000. .
At the same time, in order to solve the problem of lack of containers and cabins for foreign trade companies, a large number of container companies have begun to expand their production, and shipping companies have also increased their capacity significantly, and have placed orders for new ships.
According to Clarkson's statistics, from January to October this year, a total of 110.08 million dwt new ship orders were transacted worldwide, an increase of 156.1% year-on-year.
The secretary of the board of directors of a listed shipbuilding company told a reporter from the Securities Daily: “The delivery of a large number of new ship orders this year will be mainly concentrated in 2023 and 2024. In the future, as these ships are completed and delivered, coupled with the congestion of North American ports, Effective alleviation is expected in 2023, and the efficiency of the use of a large number of container ships will be significantly improved, which may jointly impact the freight rates of North American routes."
However, the expansion of container and ship production has also caused industry insiders to worry about whether the new capacity will cause overcapacity.
A shipping person told a reporter from the Securities Daily: “The port has been in a state of congestion for a long time, and ship turnover is an important reason for the imbalance in the supply chain of this round of consolidation. Once the supply chain is restored, container manufacturers and shipping companies will consider overcapacity, etc. problem."
A relevant person in charge of a listed shipping company revealed to reporters: "All major shipping companies have ordered new ships, but the company orders ships based on the consideration of ship replacement. After the delivery of the new ships, the old ships will be eliminated accordingly. ."
It is understood that the International Maritime Organization (IMO) new regulations on technical and operational measures to reduce the carbon intensity of international shipping will take effect from January 1, 2023, which will pose a huge challenge to the shipping market.
Liu Dawei told reporters: “Many old ships will be subject to carbon emission restrictions to abandon or slow down. At the same time, new ships’ capacity may not be able to quickly fill the gap, and the shipping market may see an imbalance between supply and demand again.”
Port and shipping digital transformation is imperative
Port congestion prolongs the cycle of shipping, and some shipowners choose to call at other ports or even refuse to receive cargo from the congested port.
Liu Dawei introduced: “In the past, the normal transportation cycle for our ships to South America was 45 to 60 days, but now it takes 80 to 90 days.” Manager Cui told reporters: “When the British port is heavily congested, many shipowners’ stop. 'Cargo in British ports.'
It is also reported that on December 13, there were as many as 101 cargo ships waiting to enter the port at the Port of Los Angeles and nearby Long Beach, a record high.
Zhang Hao, head of Beihai International Express, told a reporter from the Securities Daily: “When the congestion is the most congested, the port is full of goods, overseas warehouses are bursting, and customs clearance requires queuing.”
How does port congestion form?
Is there a solution?
Various issues have caused controversy in the industry.
Insiders have detailed the reasons for port congestion: the infrastructure is old, the volume of new large ships has increased, the port's carrying capacity has been exceeded, the shortage of dock workers, the low loading and unloading efficiency, the incomplete storage facilities, the infrastructure of MTR combined transport and port and road combined transport Insufficiency and congestion of the multimodal transport network.
In this regard, some port officials said: “A major factor in port congestion is the massive loss of staff due to the epidemic. In addition, the shortage of truck drivers and strikes by train drivers are also major factors that cause unmanned container transportation to accumulate in the port. "
Zhang Ran, director of the Digital Intelligence Technology Department of Daxie China Merchants Wharf, believes that the traditional wharf relies too much on people, which will lead to slow response in the face of uncertain factors.
According to reports, in order to solve the problem of port congestion, the Port of Long Beach and the Port of Los Angeles in the United States have successively announced 7×24 hours of operation.
But it seems that the effect is not great at present.
According to industry insiders, traditional ports urgently need to transform, upgrade and optimize themselves, otherwise the congestion problem will still be difficult to solve in the short term.
In this regard, the above-mentioned port person analyzed: “As ships become larger, traditional ports must first strengthen infrastructure construction, otherwise the loading and unloading of large ships cannot be completed; in addition, ports need digital and intelligent solutions to save labor and time costs. "
Take China Ports as an example. In February, the State-owned Assets Supervision and Administration Commission of the State Council formally issued the "Notice on Accelerating the Digital Transformation of State-owned Enterprises", which clarified the basis, direction, focus and measures of the digital transformation of state-owned enterprises, and initiated a new digital transformation of state-owned enterprises. Chapter.
As a transportation hub, port companies have seized this strategic opportunity to effectively improve port operation efficiency and achieve business growth with the help of digital technology.
Digital transformation has greatly improved the port's loading and unloading efficiency.
According to the container port performance index ranking in October this year, 6 Chinese ports are among the top 10.
From the perspective of industry insiders, digital transformation is the inevitable choice for the current port upgrade. In the next stage, the port upgrade will extend to the upstream and downstream industrial chains.
Zhang Ran said: “The clogging of some international ports reflects the fragility of the supply chain. The supply chain of the entire terminal requires the cooperation of various nodes. A systemic problem at any one node will affect the entire industrial chain.”
The industry believes that in the entire supply chain, data flow, information flow, and capital flow run through, and data and application islands in each link should be opened up, and customers and many suppliers should be coordinated to provide one-stop supply chain services.
Port congestion has also sounded the alarm for ship owners. In order to fill the shortcomings of the logistics supply chain, shipping giants have started to build a diversified logistics supply chain.
The Mediterranean Shipping Company (MSC), which has only expanded its capacity, has changed its old style of buying ships and invested in logistics.
According to news on December 21, Mediterranean Shipping Company (MSC) has submitted an offer for Bolloré Africa Logistics, the largest logistics transport company in Africa.
On December 22, Maersk announced that it had reached an agreement to acquire LF Logistics, a contract logistics company headquartered in Hong Kong, China.
As early as August this year, Maersk also acquired two logistics companies focusing on B2C parcel delivery and B2C distribution services in Europe and the United States. In addition, it also acquired an omni-channel, digital supply chain service provider in September.
In addition to logistics companies, shipping giants are also targeting port terminals. After congestion in many ports around the world, COSCO SHIPPING spent 500 million yuan in September to acquire a 35% stake in the CTT terminal in Hamburg, Germany.
In addition, both Hapag-Lloyd and CMA CGM have acquired terminals.
Insiders said that this year the shipping company's profits are very lucrative.
For shipping companies with large amounts of capital, it is time to invest in logistics, terminals and other assets to build a diversified logistics industry chain.
While the shipping giants continue to expand their transportation footprint, they are also actively carrying out digital transformation.
A person who has been engaged in the shipping industry for a long time told reporters: "Nowadays, many customers have put forward digital transformation requirements; because of the repeated epidemics, if customers need to export, they can be arranged normally through the Internet."
In this regard, a person from COSCO SHIPPING Holdings told the "Securities Daily" reporter: "From the perspective of this epidemic, we should build a more stable and efficient global supply chain, and a more diversified and three-dimensional logistics supply chain service network. Ensuring the smooth operation of the global economy is of utmost importance. For some time to come, globalization and digital transformation will become important characteristics of the development of the shipping industry."
From the perspective of industry insiders, if the port can achieve digital transformation and the various transportation supply chains can be connected, it will help freight rates return to normal.
(Securities Daily)