Original title: Survey丨Shipping prices accelerated?
The US-Western route halved again in the third quarter, and it has fallen back to 2 years ago!
More truck drivers say the market is the worst in ten years
Since the beginning of this year, the global shipping price has continued to fall despite the high base in the previous period, and the downward trend has accelerated since the third quarter.
On September 9, data released by the Shanghai Shipping Exchange showed that the freight rate for exports from Shanghai Port to the West American base port market was US$3,484/FEU (40-foot container), a 12% drop from the previous issue and a new low since August 2020. .
On September 2, the US-West freight rate fell by more than 20%, directly from above $5,000 to the "3 prefix".
Industry insiders predict that high overseas inflation will squeeze demand and the downward pressure on the economy will continue to intensify. Compared with the shipping price of tens of thousands of US dollars last year, the global container shipping market in the fourth quarter is still not optimistic. fell further.
U.S.-Western routes plummet again
fell back to the level of two years ago
The third quarter is a traditional peak season in the global container shipping market, but this year, the freight rate did not rise as expected, but continued to decline rarely.
On September 9, the Shanghai Export Containerized Freight Index released by the Shanghai Shipping Exchange was 2,562.12 points, down 10% from the previous issue, recording a 13-week decline in a row.
Of the 35 weekly report data released by the agency this year, 30 weeks of declines have been recorded.
The latest data shows that on the 9th, the freight rates (maritime and marine surcharges) exported from Shanghai Port to the US West and US East base ports were US$3,484/FEU and US$7,767/FEU, respectively, down 12% and 6.6% from the previous issue, respectively. Prices in the U.S. and West have hit a new low since August 2020.
On September 2, the US-Western route dropped by 22.9%, from $5,134/FEU on August 26 to $3,959/FEU.
It has fallen by more than 30% in the past two weeks.
Since the price on July 1 was US$7,334/FEU, the US-Western route has fallen by more than 50% since the third quarter.
Considering that the price of some US-West routes exceeded US$30,000 last year, the freight rate of this year's US-West routes has dropped by 80-90% compared with last year's high point.
The Shanghai Shipping Exchange report pointed out that the recent performance of China's export container transportation market is relatively sluggish, and the transportation demand lacks growth momentum.
As far as the North American route is concerned, the future economic outlook is facing a situation of stagflation at a time when the Fed will continue to take tightening measures to curb inflation.
In the last week, the performance of the transportation market failed to improve, and the fundamentals of supply and demand were relatively weak, which led to the continued downward trend of market freight rates.
It is worth mentioning that the Shanghai Composite Export Container Freight Index shows that the freight rate has fallen for 17 consecutive weeks from the high point at the beginning of the year, then rebounded for 4 weeks, and then fell again for 13 consecutive weeks. In late July, it fell below the level of the same period last year.
The market has been falling and falling, and even intraday losses can reach hundreds of dollars.
In terms of other important data, Drewry's World Containerized Freight Index (WCI) has been declining for 28 consecutive weeks, with a drop of 5% in the latest period to US$5,378.68/FEU, down 47% from the same period last year and a 5-year average of 3,679. The dollar was 46% higher.
The Baltic Sea Freight Index (FBX) Global Composite was at $4,862/FEU, down 8% last week.
The Baltic Dry Index rose 35 points, or about 3 percent, to 1,213 on Friday, after rising 11.7 percent last week, its highest level since mid-May.
But the index is also at its lowest level in nearly two years due to a drop of more than 49% in August.
Revenue and share price of shipping companies are under pressure
Recently, the drop in shipping market prices has been reflected in the stock prices of listed companies.
At the end of June, the share price of the shipping sector has experienced a wave of oversold conditions.
Affected by the still strong second-quarter earnings report, the stock prices of most shipping companies have subsequently recovered significantly, and investor sentiment has risen.
However, due to the continuous decline of shipping prices, the stock price of the sector has turned down again recently, and the stock prices of Maersk, Evergreen, Yang Ming and other companies once recorded new lows this year.
In early September, some listed shipping companies disclosed their performance in August, which also showed a decline in the market.
In August, Wanhai's revenue was NT$21.3 billion, the lowest level in the past year, down 13.58% from the same period last year; Yang Ming's revenue reached NT$35.1 billion, a year-on-year increase of 7%. Evergreen Shipping's revenue was NT$57.4 billion, a year-on-year increase of 14.83%.
On September 7, Zhang Shaofeng, business manager of Yangming Shipping, admitted that he was too optimistic about the stabilization of freight rates in May, and the market downturn exceeded expectations. The container shipping company was indeed under pressure from shippers to renegotiate contract freight rates.
Zhang Shaofeng said that due to inflation suppressing consumption, freight rates are continuing to “normalize” due to the reduction in cargo volume. The abnormal situation where freight rates on the European and American routes have soared to five figures in the past two years is no longer normal, but it will not return to the epidemic situation. The low water level around the first 2,000 US dollars will be seen after October. If the economic outlook develops in a positive direction, shipping is expected to benefit, and the freight rate will have the opportunity to stop falling or even rebound.
Co Ansu, president of Maersk's Asia-Pacific Shipping Operations Center, pointed out earlier that Asia's shipping operations are relatively stable, and the company is now focusing on Europe: Europe faces challenges such as strikes, drought-induced river water levels, and a shortage of truck drivers.
The priority of the Maersk Asia team is to minimise the impact of these issues through global collaboration, closely monitor developments and ensure timely and up-to-date information for customers to help them meet the challenges of global supply chains.
Busy before the holiday? Truck drivers reflect weak market conditions
As an important participant in the shipping market, truck drivers have a deep perception of the market.
In the past years, before the "double festival" of the Mid-Autumn Festival and the National Day, as the shippers seized the time to ship goods, the situation of long queues to enter the port frequently appeared, but the situation has changed this year.
Recently, a netizen posted a video saying, "Shanghai Waigaoqiao Wharf is full of container trucks, stretching for dozens of kilometers."
The reporter visited and found that such videos are exaggerated.
However, as far as the current situation of the industry is concerned, many truck drivers report that the market situation is indeed somewhat down.
Master Yang, who has been engaged in transportation around Shanghai Port for a long time, said that in the past two years, the number of trucks has been large and the market competition is fierce.
However, due to the repeated epidemics, the situation of "more vehicles and less goods" has put more pressure on freight practitioners.
In Shenzhen, there are also many container trucks parked on the roads around Yantian Port and Shekou.
Investigating the reason, industry insiders pointed out that, on the one hand, when the volume of goods is relatively small, container truck drivers have to wait for a long time for orders. It is more convenient to park on the side of the road, and it also saves parking fees, even if they have to risk illegal parking and be "fine". On the other hand, many parking lots have been developed for other purposes, the parking space has been greatly squeezed, and it is indeed inconvenient for drivers to park.
Master Hu, who has been driving trucks for about 13 years, told reporters that there are many vehicles in the market, the volume of goods is relatively small, and the competition is fierce, which doubles the pressure on drivers to take orders.
In the case of high oil prices, the freight rate of container truck orders is low, which makes it more difficult to support satisfactory profits.
"I used to have orders almost every day, but I have made 3 orders since September." Master Hu said that the unit price is not satisfied, and drivers often choose to rest.
Master Wu, who is about to retire, admitted that "this year's market is the weakest" in the more than 10 years he has been engaged in port container truck transportation.
Master Wu said: "In the past, when I received an order, I could still negotiate with the logistics company, but now there is almost no room for negotiation."
Global demand weakens, shipping industry is not optimistic in the fourth quarter
For the global container shipping market, the third quarter is a traditional peak season.
However, from July to September this year, the market failed to recover as scheduled, but continued to fall under pressure, which made many people in the industry feel that the "seller's market" has completely transformed into a "buyer's market".
A report released by Maersk earlier pointed out that the economic outlook of major Western economies is weak, and consumer demand remains sluggish, resulting in a mediocre peak freight performance this year.
In an interview with a Securities Times reporter, Founder mid-term futures researcher Chen Zhen said that from the perspective of transportation capacity demand, due to the negative impact of the spillover from the conflict between Russia and Ukraine and the acceleration of interest rate hikes by European and American central banks, the downward pressure on the global economy has continued to intensify, and the United States has fallen into a period of technical recession. The downward pressure on the European economy is also great, the growth of demand in Europe and the United States has slowed down sharply, and large retailers in the United States have cancelled billions of orders.
From the perspective of transportation capacity supply, the global container transportation capacity increased by 3.9% year-on-year in the third quarter, which was at a moderate level in the past 7 years. Due to sluggish demand, the idle capacity rate reached a peak in the past 5 years.
Although there have been strike incidents in many ports in Europe and the United States, with the lifting of complete epidemic control measures in many countries, the overall trend of port operation efficiency and ship turnover efficiency has increased, resulting in an increase in the actual supply of transportation capacity.
Chen Zhen believes that the global container shipping market is still not optimistic in the fourth quarter, and there will be a sluggish market in the peak season, and the freight rate will fall further.
The freight rate in the fourth quarter is definitely far lower than the level of the same period last year, and even worse than the third quarter of this year.
In addition, the amount of new ships launched in the next four months of this year is relatively limited, but there will be concentrated launches in the next two years, and more countries will relax epidemic control, and the pressure on capacity supply will increase sharply.
Next year, the spot freight rate will be further weakened, and the long-term freight rate next year will also be greatly reduced.
Shassie Levy, CEO and founder of digital freight platform Shifl, believes that before the epidemic, the price from China to Los Angeles could be as low as $900-1,000. At this price, shipping companies will lose a lot of money.
Now, the ports of New York and Los Angeles are seeing a sharp drop in freight rates, and such rates can cause a ripple effect, with demand and freight rates falling further.
But Levy also pointed out that although the freight rate is lower than the high point, it is still almost 2 times higher than before the epidemic.
The market appears to be re-competitive, and freight rates will return to full competition.
(Reporters Zhu Kai and Song Chunyu also contributed to this article)