During this year, the overall price of global shipping continues to fall unilaterally, the third quarter is the traditional peak season of the global container shipping market, but this year, July-September, the global container shipping market did not rise as expected, once rose to "ridicules” level container shipping prices continue to fall quickly.
Inflation and geopolitical impact, global container transport demand is still weakening, the situation of falling freight rates will continue.
Traditional peak season is no longer existed
Shanghai Shipping Exchange released the date on September 16, which shows that the Shanghai Export Container Freight Index (SCFI) fell 249.47 points to 2312.65 points last week, a drop of 9.9%, below the low point since late December 2020, compared to the beginning of the year close to the halved level.
The Founder's medium-term futures research report on September 7 compared the data of the first three quarters, the data show that the Shanghai export container freight comprehensive index shows that from the beginning of the year global container freight prices fell for 17 consecutive weeks, followed by a rebound of 4 weeks, and then fell again for 12 consecutive weeks, in late July has fallen below the level of the same period last year.
The report also shows that the South American routes were once a unique counter-trend rise, but near the end of July, the same high fall, from August, all routes have continued to decline. Into September, the market accelerated the decline, Shanghai - U.S. West route rates approaching 3,000 U.S. dollars / FEU, Shanghai - Europe route approaching 4,000 U.S. dollars / TEU, even the same day the afternoon offer than the morning offer more than 100 U.S. dollars / FEU low situation. Global clients ( manufactures, hot melt adhesive resin buyers etc.) looking for lower quotes, will immediately cancel the previous high-priced space, and even unwilling to pay the cancellation fee, these costs often need the freight forwarder to take the blame, becoming a point of conflict between freight forwarders and cargo owners.
The Data released by research firm Descartes Datamyne showed that maritime container traffic from Asia to the U.S. fell 1% year-on-year to 1,796,610,000 (in 20-foot containers) in August, the first time in 26 months that the volume turned down year-on-year.
U.S. and Western ports had experienced severe congestion during the New Crown outbreak. Nikkei Asian Review has reported that in the past, affected by the epidemic, the U.S. West from the end of 2020, there was a wave of port congestion, and further worsened last summer, when it took about 30 days to deliver goods from Asia to the U.S. West, two to three times longer than usual, in the global supply chain tensions led to a wild spike in freight rates.
Now the situation has been completely reversed. The U.S. port of Long Beach in California has seen imports fall for two consecutive months. Meanwhile, the neighboring port of Los Angeles has also seen the largest drop in inbound cargo since the early days of the outbreak. The U.S. ports of Long Beach and Los Angeles handle about 40 percent of the container trade with Asia.
Port of Long Beach executive director Cordero (Mario Cordero) said on Sept. 19 that this year's peak season is July, which is earlier than normal because retailers want to avoid another logistical bottleneck at the end of the year during the Christmas and New Year holidays.
However, he expects consumer demand, which has lasted a year and a half, to wane. The latest data show that U.S. consumer spending and retail sales are growing slowly, a sign that the worst inflation in nearly 40 years is beginning to take its toll on the economy.
Banzan hot melt adhesive works closely with freight forwarding partners in the transport to find the best freight solution to global client final point of distribution across the world. Generally, we first ensure to increase the manufacture sufficiency, which means each international order can be shipped out in as short as 3 days (priority level). Secondly, we works with reliable freighters to depart from the port as soon as they can, so even unpredictable delay happens, it will have chance to minimize the delays.
Negative trends will still exist in the short term
Analysts expect that container freight prices will be difficult to return to normal at least until 2023, and prices are afraid to probe the pre-epidemic level.
Founder medium-term futures research report said, from the supply side of capacity, the global container capacity in the third quarter year-on-year growth of 3.9%, in the last seven years in the medium level, due to the sluggish demand, capacity idle rate hit nearly 5 years peak. Although there were strikes in several ports in Europe and the United States, the overall trend of port operation efficiency and ship turnover efficiency rose as many countries lifted full control measures on the epidemic, making the actual capacity supply still grow. In the next four months of this year, new ship launches will be relatively limited, but in the next two years there will be a concentration of launches, coupled with the relaxation of epidemic control in more countries, the pressure on capacity supply will increase sharply.
DHL Global Forwarding shipping chief Markus Panhauser predicted that shipping operators will quickly cut capacity and announced that the number of fixed sailings to be cancelled in October (blank sailings) has surged by 40%. With so many scheduled sailings cancelled, the future may usher in another container shortage crisis.
Peter Sand, chief analyst of Xeneta, pointed out in the JOC network forum on the 15th that if calculated at current rates, most shipping operators can make profit as long as 50%-60% capacity utilization, but if rates continue to decline, capacity management will face problems. Vessels.
From the capacity demand side, the global economic downward pressure continues to "freeze" the shipping demand. Founder medium-term futures predicts that the global container shipping market in the fourth quarter is still not optimistic, there will be a peak season is not prosperous market, freight prices will further decline. The freight price in the fourth quarter will definitely be much lower than the level in the same period last year, and even worse than the third quarter this year. Next year spot freight rates will be further weakened, and next year's LTA prices will also be significantly reduced.
HSBC Global Research (HSBC Global Research) predicts that container spot freight rates may fall to the level before the epidemic, although the contract rates of shipping companies should be higher than before the epidemic. However, the end result will be that the profitability of container lines in 2023-2024 will fall by 80% from this year's record levels.
Standard & Poor's freight forecasting model predicts that the Baltic Dry Index, a barometer of seaborne prices for major raw materials, is expected to fall by about 20% to 30% this year before recovering slightly in 2024.
With connections at key ports and transportation hubs all throughout the world, Banzan adhesive can expect quick and efficient delivery with every load. We frequently work with clients who demand top-of-the-line speed and efficiency in their shipping and freight operations. From there, we strive to provide top-tier air freight solutions that allow us to deliver clients’ cargo quickly and at affordable rates.
Source Credit to China STCN news (https://www.stcn.com/xw/sd/202209/t20220921_4873185.html)
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