The Trend Of International Container Freight Rates

Affected by factors such as the continued strong demand for international container transportation and the obstruction of the logistics supply chain caused by the global spread of the new crown pneumonia epidemic, last year, the supply and demand of the international container shipping market was out of balance, the capacity of container ships was tight, and the prices of many links in the shipping logistics supply chain were soaring. What will be the trend of the international container shipping market in the future? Will prices continue to “go up like crazy”?

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  1. The imbalance between supply and demand is difficult to alleviate

Generally speaking, container capacity is mainly determined by two factors, one is the empty container turnover rate, and the other is the efficiency of ship operation.

In terms of the supply of empty containers, my country’s export heavy containers on international routes are generally larger than imported heavy containers. In addition, my country took the lead in controlling the epidemic and taking the lead in resuming work and production. A large amount of demand for goods began to shift to China, and the demand for empty containers increased significantly. At the same time, the overseas circulation of containers is not smooth, and the return of empty containers by sea has slowed down, resulting in a shortage of empty containers.

However, my country is the largest country in the manufacture of shipping containers. Since the second half of 2020, the Ministry of Industry and Information Technology and other departments have been actively coordinating Chinese container-making enterprises to expand container output, and the Ministry of Transport has actively coordinated and instructed liner companies to increase the return of empty containers from overseas ports. At present, the shortage of empty containers in my country’s ports has been basically resolved, and the supply of new containers is adequately guaranteed, which has weakened the impact on freight rates.

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At the same time, the gap in shipping capacity is not so easy to fill. According to data from Alphaliner, an international shipping consultancy, by the end of 2021, the total container space of global container ships will be 24.97 million TEUs, an annual increase of 4.6%. All ships available worldwide have been put on the market, except for necessary repairs and maintenance. Due to the low elasticity of supply of shipping capacity, new ship orders generally require a shipbuilding cycle of more than 18 months to be placed on the market. In the case of a surge in demand, the supply cannot achieve rapid growth.

More serious than the lack of transportation capacity is the poor transportation turnover. Overseas ports, especially the ports on the west coast of the United States, are seriously congested, and the inland collection and distribution system is not smooth, resulting in serious loss of capacity. According to statistics, the punctuality rate of ships in 50 major ports in the world dropped significantly last year. The comprehensive punctuality rate index of global trunk routes released by Shanghai Shipping Exchange has been within 20% for a long time (generally 72%-73% before the epidemic). Although it has improved this year, it has only recovered to around 28% by April. Analysis shows that this imbalance of supply and demand will continue in the short term.

  1. Freight rates will remain high

The rising sea freight rates, which has attracted much attention, mainly refers to the increase in freight rates in the spot market. The global container transportation market is dominated by long-term contracts, and the current long-term contracts account for about 70% of the goods.

It is mainly small and medium-sized foreign trade enterprises that adopt the freight rate in the spot market. Under the circumstance of tight space, some freight forwarding companies have significantly increased the shipping freight and surcharges of liner companies. The more freight forwarding levels, the greater the price increase. , which is also an important reason why some companies reported that the freight rate “increased” last year.

Some analysts pointed out that from the supply side, it is expected that the new container ship capacity will still be low in 2022, and the new ship delivery volume will be about 1.027 million TEUs, an increase of about 4.1% compared with the total market capacity at the end of last year, and the increment is higher than that of 2021. Years decreased slightly. From the demand side, the overall global container shipping demand will remain strong in 2022. The World Trade Organization forecasts a 4.7% increase in global merchandise trade this year. Based on the forecasts of many domestic and foreign institutions and shipping companies, the growth rate of international container shipping demand in 2022 will also be around 4%.

The person in charge of the relevant department of the Ministry of Transport said that in 2022, the global container shipping market demand and supply will basically maintain a synchronous growth, but there are uncertainties in the stability and smoothness of the international logistics supply chain. The main reason is that the new crown pneumonia epidemic is still spreading globally, and some overseas major There is no obvious sign of improvement in port congestion. Jia Dashan believes that the congestion of some major overseas ports continues to affect the global maritime logistics supply chain. It is expected that the container shipping rate will remain high in the first half of this year. Continue to determine the direction of the market.

  1. Make every effort to stabilize the logistics supply chain

Since the outbreak of the epidemic, many overseas ports have been congested and containers are in short supply, which has directly made it difficult and expensive for foreign trade companies to ship goods, causing heavy losses to the global maritime logistics supply chain.

Despite numerous challenges, Chinese ports have remained stable and smooth. In 2021, 13 major global liner companies including COSCO SHIPPING will invest 27 million TEUs in 4 major Chinese export routes, an increase of 19.6% over 2020, far higher than the global average growth of 4.6%. The port operation is also normal and orderly. The container throughput of Shanghai Port has ranked first in the world for 12 consecutive years. On the basis of the throughput of 43.5 million TEUs completed in 2020, it further jumped to 47 million TEUs last year.

In 2022, my country’s foreign trade will face many uncertain factors. Stabilizing foreign trade and ensuring the stability and smoothness of the industrial chain and supply chain still require the joint efforts of all departments and links. Recently, a report released by the Shanghai Shipping Exchange shows that although the local epidemic situation in my country has recently spread to multiple points, the epidemic situation in the whole country is generally controllable, which supports the export market to continue to maintain a positive trend, and drives the container throughput of my country’s ports to maintain a high level. In the first quarter, the national port cargo throughput and container throughput continued to maintain steady growth.

In the recent domestic epidemic situation, the main hub ports still maintain 24-hour efficient operation, and quickly solve the problem of container collection and distribution, reflecting that the efficiency indicators of container ships in port and berthing time in major coastal ports in my country are in the forefront of the world. . Compared with the long-term unrelieved congestion of some major overseas ports, my country’s international maritime logistics supply chain has shown strong resilience.

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