China’s foreign trade is currently picking up, and overseas orders for textiles, electronic goods, etc. are showing a tendency to return to China. But exporters encountered another thorny problem: there were no more containers.
As the recovery of foreign trade is much better than expected, and the overseas epidemic continues, the flow of containers has slowed down. The shipping market has recently experienced a situation where it is “hard to find a cabin”.
Since early October this year, container freight rates on most routes in Asia have more than doubled due to tight shipping capacity. A freight forwarder in Mumbai, India, said that container freight from the Far East to India or Southeast Asia has risen to US$2,500~3,000/standard container, while the freight at the end of September was only US$1,000/standard container.
Industry trade sources said that capacity shortages and trade disruptions in the Asian container shipping market are affecting polymer trade flows and prices in the region, and there is little hope that the market will be rebalanced before the Spring Festival.
For the route from Taiwan, China to India, Maersk’s recent container freight quotation is US$4,120 per standard container. The freight agent said: “This is the first time I have seen the freight rates on short-distance routes so high. The container freight rates on this route in September were between 800 and 1,000 US dollars per standard container.” Another freight agent said: “Freight rates are currently very volatile, and shipping company quotes are only valid for one week.”
Now you can earn 146 per container Dollar!
Shipping companies are unexpected winners
Marine shipping is The most important mode of transportation in China and the world’s international trade, the fluctuation of container shipping freight has brought huge pressure to shippers, freight forwarders and other links.
Data from the Shanghai Shipping Exchange shows that since June this year, the average space utilization rate of ships on routes from Shanghai to Europe, North America and other routes has been above 95%, and has basically remained 100% full since November. The condition is truly “hard to find”.
Shipping companies have also unexpectedly become one of the few winners in the epidemic crisis. Their profits in the third quarter have exploded, reaching hundreds of millions of dollars.
Maersk, which has the largest capacity, is the financial leader in the shipping industry. In the third quarter of 2020, its earnings before interest, taxes, depreciation, and amortization (EBITDA) were US$2.3 billion, an increase from the previous year. Growth was 39% over the same period.
Japan’s ONE Shipping Company’s EBITDA soared 78% in the third quarter to US$872 million.
Hapag-Lloyd EBITDA increased by 17% to US$768 million.
CMA-CGM’s net income in the third quarter was US$567 million, a year-on-year increase of 522%.
Zim Shipping Company reported a staggering 145% increase in revenue to $262 million.
Yang Ming Shipping did not provide EBITDA data, but the Taiwanese shipping company’s operating profit in the third quarter was US$230 million, compared with a loss of US$38 million in the same period last year.
At the beginning of the epidemic, even the shipping companies themselves could not believe it.
It is understood that currently, shipping companies are still making crazy money every second, and the profit per standard container exceeds 100 US dollars, among which Hapag-Lloyd, Maersk, and HMM are A well-deserved money-maker.
First place: Hapag-Lloyd, with a profit of US$146 per standard container.
Second place: Maersk, with a profit of US$130 per standard container.
Third place: HMM, profit per standard container is US$129.
Delays in delivery of polyester products in Asia may lead to a new round of price increases
The surge in container freight rates has caused Asia Polymers to Price increased. In mid-November, many container shipping companies in Asia announced that they would increase freight rates by US$100 to US$150 per box, and a new round of price increases is expected to be implemented from early December.
Jon Monroe, founder of Jon Monroe Consulting, said the main reason for the surge in container freight rates is that most Asian countries, especially China and Vietnam, are facing serious container shortages .
Nick Coverdale of Agree Freight Company said that unemployment benefits in the United States have led to a surge in demand, and merchants are willing to pay double freight in order to get goods from Shipping from China to the United States. Containers are starting to pile up in the U.S. and Europe, but are returning more slowly to Asia. The lockdown measures adopted in Asia in response to the new coronavirus epidemic have affected demand for imported goods. This only drove up freight rates on transpacific and transcontinental routes, soon leading to a severe shortage of containers within Asia.
Container capacity shortages are affecting trade flows and causing delivery delays in the Asian polymer market. A Malaysian polymer trader said: “Polymer shipments in many places in Asia are facing delays because sellers cannot find containers. Even if sellers manage to get containers, it is difficult to find space on ships.” Chinese polymer sellers have already Seeking to renegotiate polymer prices to ease pressure from soaring freight rates. A polymer trader in Mumbai, India, said: “Rising freight rates will affect�� Sellers’ profits, so they have asked buyers to bear more than half of the increased shipping costs. ”
The rise in container transportation costs has also pushed up the price of polymers in Asia. Market participants said that Formosa Plastics’ PVC quotation for December delivery was US$1,100/ton (CFR , China), up $40/ton from last month. According to Platts data, the price difference between CFR India and CFR China widened to a record high of $103/ton on November 20 for purified terephthalic acid (PTA). , and this is mainly due to rising freight rates. Sources said that Taiwanese manufacturers were unable to reach PTA deals for December shipments due to the inability to guarantee containers.
Ship delays add to confusion , the shortage of containers will continue
In recent months, containers have been severely unevenly distributed around the world, with serious shortages in some regions and serious backlogs in some countries. The shortage of containers in the Asian shipping market is currently particularly serious. , especially in China. The shortage of containers in ports such as Shanghai, Ningbo, Qingdao and Lianyungang has intensified recently, and ship delays have exacerbated chaos and container shortages.
Regarding the tight container situation, China’s container industry Huang Tianhua, chairman of the association and vice president of CIMC, said there are three reasons:
First, due to port congestion in Europe, the United States and Australia, which reduces the efficiency of container circulation, a large number of containers are exported overseas. , but it is difficult to return to the country in a short period of time, and the short-term import and export mismatch further aggravates the shortage of supply;
Second, the epidemic has caused the manufacturing production capacity in Europe and the United States to stagnate, but at the same time due to monetary easing, The consumption power of residents is relatively strong, which has boosted the demand for manufacturing in the Far East in European and American countries. Coupled with the demand for Christmas stocking, China’s exports have surged in the short term;
Thirdly, China’s economic activities have accelerated The export trade has recovered rapidly. At the same time, part of the manufacturing industry in Southeast Asia has been transferred, and China’s exports have further increased. The above factors have increased the demand for containers by shipping companies and container leasing companies.
Coverdale said capacity shortages in Asia’s container shipping market are likely to last at least until the Lunar New Year holiday. Freight forwarders in Mumbai said shipping lines have begun focusing on shipping empty containers from the United States and Europe back to China, but trade flows are returning to normal It will still take several months.
In November this year, Germany’s Hapag Lloyd said it would stop shipping agricultural goods from the United States to China to shorten the time it takes to transport empty containers. The turnaround time for shipping back to China. But traders said that even if such measures are taken, it will take some time to alleviate the trade imbalance.
Including shipping companies Maersk, Hapag-Lloyd, etc. , Textainer and Triton, the world’s top three container equipment leasing companies, all said that there will continue to be a shortage of containers in the next few months. It will be difficult to restore balance between supply and demand before mid-February next year, and the shortage of containers will continue until the Spring Festival of 2021. after. </p
