Beijing, December 14th: China’s latest export container shipping index hit a record high, reflecting a shortage of container supply, mainly due to the rapid growth of China’s exports.
Tracking the spot and contract freight prices of 12 global routes of Chinese container ports as of last Friday, the average level of the China Container Freight Index (CCFI) was 1,411.98, compared with the previous week It was up 6.7%.
Containers are difficult to order and shipping charges are rising, making foreign trade people want to cry without tears
Liu Yang He runs a foreign trade company in Yanjiao, Hebei Province. Since sea freight rates soared in October, his work has become much busier.
He has been engaged in the rubber sealing industry for more than ten years, and his overseas business has extended to Europe and other places. The rubber sheets produced by the company are exported overseas and then processed twice by overseas customers, which are semi-finished products. , so the profit margin is lower.
Under normal circumstances, the profit of a 20-foot container is usually only about 10%-15%, which is about US$1,000-1,200. The company’s operating conditions are not bad. But since sea freight has soared, every order has to be lost.
“According to previous standards, when we export a 20-foot (26 cubic meter) container, the sea freight is US$1,000 under normal circumstances. When it is cheap, it is only US$800. But from October The shipping fee started to rise, and now it has reached 4,000 US dollars, which has increased four times, and every order is lost by thousands of dollars.” Liu Yang told reporters.
Generally, foreign trade companies have fixed large customers. At the beginning of the year, they have placed orders for the whole year, signed contracts, and set shipping prices. , even if there is an increase in shipping prices, etc., the goods must be shipped in accordance with the contract, otherwise you will lose your credit and your business in the coming year will be ruined.
Liu Yang told reporters that on the one hand, with the outbreak of foreign epidemics in April and May this year, many overseas products, especially food goods, are no longer imported into the country. As a result, containers are hoarded in various overseas ports, and domestic containers are in an extreme shortage.
On the other hand, when the domestic epidemic broke out at the beginning of the year, many large shipping companies assessed that China’s exports would drop sharply, so they reduced ship capacity. Under a two-way effect, As the domestic epidemic has been effectively controlled, export volumes have surged, but the corresponding containers and shipping capacity cannot support it, causing shipping prices to soar.
As a freight forwarding company that connects traders and shipping companies, it has also sensed this change.
Lin Xu (pseudonym), the person in charge of a freight forwarding company in Tianjin, told TMTpost that their company is mainly responsible for India-Pakistan, Southeast Asia and European routes. When shipping prices rose, they also contacted Shipping company, I want to know the reason for the price increase. The other party’s salesperson said that the previous freight rates were too low, causing most shipping companies to be in a state of loss. The way to stop losses was to reduce ships to reduce positions and increase bargaining power.
“At present, our freight forwarding company still has the largest number of orders from Europe. Basically, positions are reported to the shipping company half a month in advance. Positions on special routes require additional money. The demand for large and tall containers is the greatest,” said Lin Xu.
He also said that now the shipping company has changed the freight rates that were originally expected to be maintained for half a month to a month to change every week. Severe price fluctuations have the greatest impact on small and medium-sized traders, so most exporters have chosen to delay shipments.
Global liner companies are making a lot of money, when will prices stabilize?
As China controls the epidemic and after the global epidemic slows down, export demand will continue to rise, creating new growth points for the foreign trade container business.
According to “China Shipping Weekly”, in the third quarter of 2020, all 10 major liner companies in the world achieved profits, with total profits reaching US$3.412 billion, which was less than US$3.412 billion in the same period last year. 800 million US dollars, 4.27 times that of the same period last year.
Performance growth of the top ten liner companies
As can be seen from the above data, Maersk has the highest profit, reaching US$1.043 billion. Rong Shipping had the largest profit increase, with a year-on-year increase of nearly 60 times. It is understood that Zim Shipping was once on the verge of bankruptcy, but in the second round of price increases, its performance increased 28 times and successfully emerged from the haze of bankruptcy.
“You can do some math. If a freighter carries 10,000 containers, the freight for each container will increase by 3,000 US dollars, which will increase the revenue by an additional 30 million US dollars. Convert It’s RMB 200 million.” Liu Yang told TMTpost that with such huge profits, major shipping companies have no incentive to reduce prices. But in fact, the relationship between foreign traders and shipping companies is complementary to each other. This situation is really hard to explain. normal. It is very abnormal and unfair to foreign trade companies.
It is understood that in the past year, affected by unstable factors such as the tightening of monetary policies in developed economies and the tense global trade environment, the container transportation industry has been in a sluggish stage. In the “good times”, we made back last year’s money in one quarter, so we naturally refused to let go of the price.
The sea freight priceWhile it continued to maintain a high level, more bad news came.
Recently, container shipping giant Maersk announced that it has levied a new peak season surcharge (PSS) in Europe and East Asia from December to next year, applicable from the Far East to Northern Europe. and refrigerated cargo from southern European countries. The surcharge will be $1000/20′ reefer, $1500/40′ reefer, and will take effect on December 15th, and Taiwan PSS will take effect on January 1, 2021.
In addition, major shipping giants including Maersk and CMA CGM have begun to introduce new FAK rates, among which MSC has implemented rates since December 1 Adjustment means another wave of price increases may be coming.
So, when will sea freight return to normal?
Li Xiaohui, deputy manager of the technical department of a container company in Tianjin Port, said that containers have never been as popular as they are now.
Affected by the COVID-19 epidemic, the port’s container throughput declined at the beginning of this year, hitting a low of less than 1 million 20-foot equivalent units (TEU) in February.
The large shipping hub in northern China saw its container throughput increase for the first time in May this year, reaching 1.65 million TEUs. Data shows that in the first 11 months of this year, its container throughput increased by 6.1% year-on-year to 17.1 million TEU.
According to data from the China Ports and Ports Association, in early November, container throughput in eight major shipping centers, including Shanghai and Ningbo, increased by 13.1% year-on-year. Specifically, foreign trade container throughput increased by 11.5% compared with the same period last year.
As a result, container manufacturers have been working 24 hours a day, seven days a week to keep up with demand.
According to foreign media reports, Textainer and Triton, among the world’s top three container equipment leasing companies, have recently stated that it will be difficult for container supply and demand to return to balance before mid-February next year. , the shortage of containers will continue until after the Spring Festival in 2021.
This phenomenon in the foreign trade industry has attracted the attention of the Ministry of Commerce. On December 3, a spokesman for the Ministry of Commerce pointed out that it will work with relevant departments to continue to promote the increase of shipping capacity on the basis of preliminary work, support the acceleration of container return, improve operating efficiency, support container manufacturing enterprises to expand production capacity, and increase the support for container manufacturing. Strengthen market supervision, strive to stabilize market prices, and provide strong logistics support for the stable development of foreign trade.
With the intervention of powerful measures, it is expected that this problem plaguing the foreign trade industry may be effectively solved. </p