Author: Miao Qi
The growth rate of my country's foreign trade imports and exports in the first seven months has recovered to double digits. The continuous decline in international freight rates has also benefited the next foreign trade shipments to a certain extent, but it also reflects the indisputable fact that the global market is weak.
According to data released by the Shanghai Shipping Exchange, on August 5, 2022, the Shanghai Export Containerized Freight Index was 3739.72, a year-on-year decrease of 148.13 and a weekly decrease of 3.8%, an increase of 1.02 percentage points over the previous period.
It was the eighth straight week of declines for the index and its lowest level since last July.
The view that the industry is generally bullish on freight rates or that it will continue to oscillate at a high level has also changed.
"One cabin is hard to find" is no longer available, and freight rates continue to decline
"The market is out of stock, and now shipping companies are rushing for goods and price competition."
Li Lin (pseudonym), the person in charge of a freight forwarding company in Zhejiang, told Yicai that there was a small rebound in freight rates two months ago due to the comprehensive unblocking of Shanghai, and then entered a downward channel.
"One cabin is hard to find" is no longer available. In the state of ships rushing for goods, the freight rate has started a downward trend, and the decline has continued to expand.
"In the past, it was necessary to book the space one month in advance, but now it only needs to be booked one week in advance." Li Lin said, "The price is definitely high if it is booked early. If the shipping agent cannot sell all the space, it will be sold at a reduced price."
According to the China Export Container Freight Index, in July 2022, the indices for the Mediterranean, US-West, US-East and Japan routes decreased by 2.8%, 3.5%, 1.8% and 1.9% respectively from the previous month.
According to the FBX Global Container Freight Index launched by the Baltic Shipping Exchange and Freighto, as of August 3, 2022, the shipping price from China/East Asia to the West Coast of North America was US$6,632/FEU (40-foot equivalent container), while China/East Asia to North America The shipping price from the east coast is $9,885/FEU; the shipping price from China/East Asia to Northern Europe is $10,463/FEU, and the shipping price from China/East Asia to the Mediterranean Sea is $10,649/FEU.
Among them, since May 20, 2022, the shipping price from China/East Asia to the west coast of North America after a rebound has dropped from US$13,698/FEU to US$6,632/FEU, a drop of more than 50%.
According to the latest quotations from shipping companies received by Li Lin, the freight rate for a 20-foot container from Ningbo Port to the US West has dropped to below US$5,000, and the freight rate for a 40-foot container is also around US$6,000. The freight rate of a foot container is more than 7,000 US dollars, and the freight rate of a 40-foot container is about 9,000 US dollars, which is more than half compared with the high of 20,000 US dollars in recent years.
"The price changes rapidly during this time, and the prices at different ports are also different." Li Lin said that the European route was affected by the port strike, and the price is still relatively high recently.
The price of Southeast Asian routes has dropped from a high of more than 2,000 US dollars to more than 600 US dollars or even lower, basically returning to the state before the epidemic.
"Because more shipowners have increased their investment in Southeast Asia, the shipping price from China to Vietnam, Thailand and other places has even reached an ultra-low price of US$50 per TEU." China's one-stop international logistics service platform "Shipping to Which" CEO Zhou Shihao told Yicai that, unlike the previous trend of high volatility, in the past 8 weeks, the overall freight rate has shown a one-way downward trend, and there is still room for continued decline.
The global market is weak, and foreign trade is showing differentiation
In Li Lin's view, the current dullness is mainly due to the fact that these few months are not the peak shipping season. In addition to the impact of the previous epidemic, orders in the second quarter have shrunk, and there is less demand for shipments today.
With the arrival of the peak shipment season after September, this situation is expected to change.
Zhou Shihao also believes that if there is no special change, the freight rate is expected to fall by about 10% to 15% this year and it will stop. The demand for Thanksgiving, Christmas and other festivals in Europe and the United States in the fourth quarter will still exist, and the downward pressure will be eased.
Chen Yang, editor-in-chief of Xinde Maritime Network, a professional shipping information consulting platform, told Yicai that the performance of shipping and shipbuilding companies this year is still considerable compared to before the epidemic, especially considering that container shipping companies are basically holding long-term contracts this year, " Long-term contracts for Maersk’s long-haul routes account for as much as 71% this year,” and profitability will still be good this year.
Although it has dropped to the same freight rate as in June 2021, compared with before the epidemic, the price of the US-Western route as an example is still several times higher than the US$1,395 in August 2019.
After all, before the historic surge due to the epidemic, the shipping industry experienced a long recession cycle.
However, under the background and expectation of the weak global market, the view of the industry insiders that they were generally bullish on freight rates or that the high volatility will remain for a longer period of time has changed.
Zhou Shihao pointed out that in the longer term, even though the freight rate in South America has risen against the trend in the past 8 weeks, due to the overall shrinking of global market demand, coupled with the gradual easing of port congestion, the efficiency of global transportation capacity has improved and the transportation capacity has been continuously released. The freight rates will continue to decline.
Chen Yang said that the recent decline in freight rates is related to the slowdown of global port congestion, although "the recent strikes in Europe and the United States and the port situation are not very optimistic."
But the bigger background is that more and more people in the industry are worried about the global economic environment, especially the impact of high inflation in Europe and the United States on consumer confidence.
Li Yanqing, secretary-general of the China Shipbuilding Industry Association and chairman of the International Organization for Standardization Ship and Marine Technology Committee, also reminded that at present, the global shipbuilding market is in a new round of development and rising, and the shipping market demand is hot.
However, the complex and changeable world economic situation, especially the fluctuations in the international trade market caused by geopolitical conflicts, the instability of the rising period of the new shipbuilding market, and the intensified inflationary pressure on a global scale, further weaken the short-term economic prospects, all of which may affect the shipping industry. And the operation of shipbuilding enterprises brings risks.
While the existing capacity will be released as the port congestion eases, the new capacity is expected to be released more in the next year and the following year.
"From the second half of 2023, more and more ships will be delivered, which will be a risk that cannot be ignored." Chen Yang proposed, however, the EEXI (Energy Efficiency Design Index for Existing Ships) stipulated by the International Maritime Organization will be released in 2023 Effective January 1, 2008, this will cause a large number of ships to slow down, thereby buffering the aforementioned risks to a certain extent.
In order to reduce carbon dioxide emissions, the implementation of EEXI will slow down most of the world's ships, which is seen by the industry as a significant reduction in the effective capacity of container ships.
In the expected change from bullish or high oscillation to downside, there is still great uncertainty about the future trend of shipping prices.
At the same time, different from the general rise in various industries in the past two years, this year's foreign trade will also show obvious differentiation, showing structural growth.
Compared with the data in the first half of the year, my country's import and export, export and import growth in the first seven months have all accelerated, and the overall foreign trade has shown a recovery trend.
In the context of controllable "order outflow", exports of mechanical and electrical products and labor-intensive products continued to maintain double-digit growth in the first seven months.
In the face of the shrinking market cake, Zhou Shihao said that traditional labor-intensive products or the previously hot "home economy" categories are facing greater challenges, but the export growth of new energy equipment, lithium batteries, electric vehicles and other categories is faster, and the value of goods It is also higher, which has played a greater role in driving my country's foreign trade.
At the same time, with the recovery of overseas travel consumption, the demand for camping and outdoor sports products such as tents will also increase, which will bring opportunities to Chinese foreign trade enterprises.
Wei Jianguo, former vice minister of the Ministry of Commerce and vice chairman of the China International Economic Exchange Center, told Yicai that in general, only a country like China with a highly complete production chain can meet the needs of the global market with multiple varieties and levels. With the continuous decline of bulk commodities and the successive decline of seaborne prices, the window period of China's foreign trade is expected to continue to be extended.
Next, it is necessary to take the initiative to "grab orders", strengthen truck transportation services, use new forms such as charter flights, and more consider and solve the difficulties of foreign trade enterprises, so that enterprises can fully enjoy the dividends brought by the window period.