China's export container freight index hits a record high

Freight forwarding: freight rates are rising, but there is no space for shipping

  Our reporter Liu Qi

  Trainee reporter Yang Jie

  Recently, the Baltic Dry Index (BDI) has been declining continuously since January 7, and has fallen for eleven consecutive days as of January 21.

  On the contrary, it is the high freight rate and the tightness of the shipping space.

According to the latest data released by the Shanghai Shipping Exchange, on January 21, the China Export Containerized Freight Index (CCFI) reached a record high of 3555.24 points.

  "The last batch of goods before the Chinese New Year is about to be shipped. I originally thought that Mason (Mason Shipping Co., Ltd.) would be able to reduce the price on February 9, but in reality there is no space." This is an Amazon seller posted on the social platform The status also expresses the voices of many sellers.

  CCFI hits record high again

  "Securities Daily" reporters inquired about relevant data, and this year, BDI has declined for 11 consecutive trading days from January 7 to January 21.

On January 7, the BDI was 2289 points, and on January 21, the BDI was 1415 points, a drop of 38.37% in only half a month, the lowest level since February 16, 2021.

Among them, on January 11, January 12, January 13, and January 14, the decline exceeded 100 points every day.

  "From the perspective of the ship type, the decline of the Capesize freight rate (BCI) is the direct cause of the decline in the BDI index." Mingming, chief economist of CITIC Securities, said in an interview with a reporter from "Securities Daily".

  However, while the BDI fell, the freight rates of ocean routes remained high.

According to data released by the Shanghai Shipping Exchange, the CCFI representing the settlement price on January 14 was 3,489.94 points, approaching the 3,500-point mark, up 57.15 points or 1.66% compared to the previous issue, which once became the highest point since the index was created. .

In the latest data on January 21, the CCFI broke through 3500 points and reached 3555.24 points in one fell swoop, rewriting the record high again.

  The Shanghai Export Containerized Freight Index (SCFI), which represents the spot price, is also at a historically high level.

On December 31 last year, SCFI reported 5,046.66 points, breaking the 5,000-point mark for the first time.

According to the data released by the Shanghai Shipping Exchange on January 21, 2022, the SCFI was 5053.12 points.

  Liu Xiangdong, deputy director of the Economic Research Department of the China Center for International Economic Exchanges, said in an interview with a reporter from Securities Daily that the freight rate of ocean shipping routes has remained high recently, mainly due to the repeated impact of the new crown pneumonia epidemic, which has caused port congestion and prompted Europe and North America. Airline supply is blocked.

In particular, the shortage of manpower is more prominent.

  Consolidation prices remain high

  Regarding the differentiation between the downward trend of BDI and the upward trend of CCFI and SCFI, it is clearly stated that CCFI and SCFI are used to measure the price of container shipping, while the BDI index is used to measure dry bulk freight, so the two trends are not the same.

At the same time, he further stated that if you look at the China Import Dry Bulk Freight Index (CDFI), you can find that it has a similar trend to BDI, and has experienced a sharp decline recently.

The high level of container shipping prices means that overseas demand is not weak, and the demand from developed economies such as Europe and the United States is stronger, which also confirms my country's high export performance in recent months.

  The Shanghai Shipping Exchange’s weekly report on China’s export container shipping market on January 22 also pointed out that in terms of North American routes, the epidemic has overwhelmed the U.S. medical system. .

The worsening of the epidemic and the inefficiency of the collection and distribution system have led to prominent contradictions in US port congestion, container stagnation, and poor transportation turnover.

In terms of European routes, a new round of epidemics caused by the Omicron strain broke out in Europe on a large scale.

The market demand for the transportation of various materials continued to remain high, the shipping capacity of the routes remained stable, and port congestion continued.

From January 15th to January 21st, the average space utilization rate of ships in Shanghai Port was basically at the full load level.

  For the chain reaction of high freight rates and tight space, logistics and freight forwarding have a better experience.

A staff member of an international logistics company told the "Securities Daily" reporter, "It is now the end of the (lunar calendar), and everyone wants to take a holiday after they have shipped out the goods. Recently, there have been more shipments. However, the current transportation capacity is tight and port congestion still exists. ."

  "Now there is no space for January 26th, only February 2nd." A freight forwarder also expressed that the recent transportation capacity is tight. As for the reason, he said, "The end of the (lunar calendar) is rushing to ship, and there are few ships. , the price has gone up.”

  Exports will remain high in the first half of the year

  "The fall in dry bulk freight rates is good for importing companies, because the pressure on their import costs is expected to ease. The still high level of container shipping prices shows that the current external demand remains resilient, and exporters are still facing the impact of high freight rates. Trade risk." Ming Ming said.

  At the same time, in Mingming's view, it should be noted that since the epidemic, the volatility of freight rates for both consolidation and dry bulk freight has increased significantly. Therefore, foreign trade enterprises need to establish a "risk-neutral" awareness, sign long-term contracts, and make reasonable use of Derivative instruments deal with price risk.

  Since last year, the high shipping prices have affected the profits of many foreign trade companies, and some companies have already taken countermeasures this year.

A manufacturing export company said that the freight is usually set according to the trade terms in the contract, which can be borne by the buyer or by the seller.

If the company undertakes it, the freight will be included in the amount of the goods according to the current freight rate.

At the same time, the company also signed agreements with some shipping companies this year to lock some space in order to cope with the sharp fluctuations in freight rates.

  "For foreign trade companies, they may face high freight rates and capacity supply problems in the short term, as well as higher logistics costs; for logistics and transportation companies, weakened demand may lead to excess capacity supply, but port logistics may be blocked. Costs remain high." Liu Xiangdong said that my country's foreign trade exports will remain high in the later period, especially since the current epidemic is still raging around the world.

Therefore, foreign trade enterprises should adjust to this situation, prepare early, carry out digital transformation, increase reserves, and improve their ability to fulfill orders. At the same time, they should actively cooperate with logistics and transportation enterprises to reduce logistics and transportation costs and ensure the stability and safety of the supply chain.

  Mingming said that the entry into force of RCEP this year has brought opportunities and challenges to related industries, and the increase in trade has brought profit growth to exporters. From the perspective of tariff cost reduction, the pressure on the cost side of my country's importers is also expected to be released.

The current global supply chain is still in the process of being repaired, and the cross-cycle adjustment measures to stabilize foreign trade at home are also being gradually introduced and actively implemented. It is expected that my country's exports will still maintain a high boom in the first half of this year. Tight monetary policy, external demand may gradually slow down, coupled with the repair of production capacity in Southeast Asia, my country's export growth rate is also facing a certain risk of falling back.

(Securities Daily)