After grabbing the boxes and grabbing the space, the freight rate has skyrocketed and the surcharges continue to increase.
The chaos and extreme phenomena in the shipping market have lasted for nearly a year. Whether it is congestion, shortage of empty containers, skyrocketing freight rates, or shortage of ship capacity, shortage of trucks, they are not the single root cause of the problem.
The problem now is-everything is in short supply. After grabbing the box to grab a space, what's worse, there is a round of surcharges from the shipping company.
The freight rate increases fiercely, one price per day
A related person in charge of a large shipping company recently told a reporter from the Securities Daily: “There are very few containers in Shanghai now, and some are very expensive. 10,000-15,000 U.S. dollars, and even some individual quotations reached 20,000 U.S. dollars."
"Now foreign trade shipments must consider the issue of freight rates. If the profit of the product is not as high as the freight rate, then the foreign trade company may reduce or stop production and not deliver. However, some profitable goods are still being shipped." The relevant person in charge of the company said, "At present, the price of the US route is the most expensive in the maritime industry, followed by the European route."
A Shanghai freight forwarder revealed to a reporter from the Securities Daily that the biggest increase in box prices was on the U.S.-Canada line and the European line, especially on some U.S. routes. The price has increased by 10 times compared with before the epidemic. "Before the epidemic, it only cost US$1,000 to US$2,000 for a box to be shipped to the United States. Now it is generally more than US$10,000. The freight rate is increasing almost every day, one price per day."
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On June 4, the Shanghai Container Freight Index (SCFI) released by the Shanghai Shipping Exchange showed that it rose 117 points to close at 3,613 points, a new record with a 3.3% increase and a 157% year-on-year increase.
On June 7, Ningbo Shipping Exchange announced that the 5.29-6.4 Export Container Freight Index (NCFI) closed at 3091.6 points, up 0.6% from last week.
According to the Ningbo Air Exchange, the space on European-to-land routes is still very tight, and it is difficult to find one cabin on some voyages. The overall booking price of the market continued to rise slightly. The freight index of the European route was 4715.9 points, an increase of 2.1% from last week; the freight index of the Mediterranean East route was 3609.3 points, an increase of 1.2% from the previous week; the freight index of the Mediterranean West route was 4603.5 points, an increase of 1.2% from last week.
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According to the above-mentioned freight forwarder, the price increase is not only in Europe and the United States and Canada, including Asia-Pacific, Africa, Japan and South Korea. The price of a standard container from Ningbo to Africa in the past was about 5,000 US dollars, but it has now risen to $20,000. The freight rates of all lines are constantly hitting historical highs.
"This wave of container price increases started in June last year. I originally thought it would be relieved by the end of last year. However, the price has risen higher and higher, and the shortage of boxes has become increasingly scarce. At present, it seems that this wave of price increases and the shortage of boxes It will not be over until the end of this year.” The relevant person of the aforementioned shipping company said.
At present, not only boxes are in short supply, but cargo space is also in short supply. An insider told reporters: "In Shanghai, the shipping space must be booked at least one week in advance, and the freight rate is also different every day."
There is a serious backlog of foreign boxes
Difficult to find domestic outbound space
Since the third quarter of last year, the phenomenon of shortage of containers and containers has spread in major ports. According to many media reports, some scalpers took the opportunity to sit on the ground and raise prices, and some routes may not get a container if they increase the price by US$3,000.
The anxiety of enterprises has continuously pushed up the selling price of containers. In the first half of 2020, the price of a 20-foot small box was US$1,600, and now it has risen to a maximum of US$3,600. The price of the popular 40-foot box has risen to US$5,950. The price has all doubled and hit a record high.
Unlike the domestic “difficult to find one container”, the Port of Auckland in New Zealand has a serious backlog of empty containers. Since the second half of 2020, in order to store those empty containers that cannot be shipped, they have found 5 new storage yards. There are nearly 6000 empty containers stranded in Auckland.
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Mark Scott, Chief Operating Officer, COSCO Shipping Group (New Zealand) Co., Ltd.: All shipping companies in New Zealand have a serious container backlog, which is twice the normal situation.
The data shows that between 10,000 and 15,000 containers are stranded in California, USA. In the Port of Felixstowe, Britain, containers have spread from the port to the surrounding suburbs. The number of empty containers in Australia's ports exceeds 50,000. At present, the stock of empty containers in some important international ports is three times the normal level.
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Roberto Gianneta, Chairman of the Hong Kong Liner Shipping Association: We found that there are now empty containers stranded in North America and Europe. In addition, empty containers in Australia and more places are also waiting to be shipped back.
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Mai Boliang, Chairman of CIMC Group: There are more than 40 million containers in operation around the world. We produce 400,000 containers a month, and 5 million containers were produced that year. If the boxes cannot be returned, you still cannot solve the fundamental problem.
In addition to the problem that foreign boxes cannot be returned, domestic ports are congested, and boxes can not get out.
Recently, the Yantian Port, the world's largest single container terminal, restricted flow due to the epidemic, causing congestion in surrounding ports. “People working at the Yantian Port Terminal are currently quarantined and unable to return home. During the quarantine period, only these workers are working at the terminal, while other employees returning home are temporarily unable to enter. This has caused the current loading and unloading capacity of Yantian Port to decline. 30%." said a port worker.
“Congestion at the Yantian Port and Nansha Port terminals is expected to affect Ningbo and Shanghai soon. Now Nansha trailers need to queue at least 5 days in advance. These factors have aggravated the congestion of the port and box transportation, and changed the cycle of boxes back and forth. In the long term, the hard-to-find situation of a box will not be eased in the short term.” On June 8, Zhou Shihao, the founder of Yunquna, told a reporter from the Securities Daily.
In the other compartment, the shipping company's space is also lacking. Due to the surge in demand in the entire market, shipping companies are also picking up customers and providing space in accordance with the VIP level.
According to a person in charge of a foreign trade company in Tianjin, this kind of picking of customers is currently prevailing in foreign shipping companies. For example, the company’s long-term partner, Japanese shipowner ONE, will give priority to Japanese companies and other large multinational companies with limited space. For many years, it has been difficult to obtain one and a half cabins. Sometimes there is a shortage of containers, and a large number of shipping companies have a backlog of containers in the United States and European ports.
Maritime surcharges continue to increase
The deformed market demand has created a deformed freight rate system. What annoys many freight forwarders and shippers is that shipping companies have repeatedly charged various surcharges.
A few days ago, the world's second largest shipping company, Mediterranean Shipping MSC, set a record for a single increase in freight rates in shipping history! The single price increase is as high as USD 3798!
Beginning on July 1, MSC will impose GRI on all goods exported to the United States and Canada. The specific increase is USD2400/3000/3798 per 20'/40'/45'.
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Hapag-Lloyd announced a few days ago that starting from June 15th, it will increase the GRI for eastbound routes from East Asia to the United States and Canada. A 20-foot container will be charged USD 2400 per container, and a 40-foot container will be charged USD 3000 per container.
This is the second time Hapag-Lloyd has announced an increase in the surcharge in recent days. At the beginning of May this year, Hapag-Lloyd announced that starting from June 1st, it will increase the comprehensive rate and surcharge for eastbound routes from East Asia to the United States and Canada. A 20-foot container will be charged US$960 per container and a 40-foot container will be charged. The box charges 1,200 dollars.
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Of course, MSC and Hapag-Lloyd are not the only shipping companies that have increased their prices sharply. Almost all shipping companies have been gearing up to launch price increase plans for major routes.
The following is the latest price increase notice of COSCO SHIPPING in Europe and the Mediterranean. From June 10, the peak season surcharge will be charged at USD800/1600.
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Notice of PCS price adjustment from Maison to Long Beach and Oakland:
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In addition, CMA CGM will increase the GRI of routes from Asian ports to the United States and Canada from June 1st, up to a maximum of 1,600 USD/container. Wanhai Shipping also said that due to the recent increase in operating costs, it will increase freight rates for goods exported from China to other parts of Asia. For 20-foot containers, the increase is US$300; for 40-foot containers, the increase is US$600; and the high-containers are increased by US$600.
Seeing that the traditional shipping peak season is approaching, the current local epidemics in Shenzhen and Guangzhou, as well as the Southeast Asian epidemic affecting port operations, the price cuts are still far away.
On June 10, the person in charge of the Foreign Trade Department of the Ministry of Commerce stated, “At present, the new crown pneumonia epidemic is still spreading globally, and the external environment facing my country’s foreign trade development is still complex and severe. We pay close attention to foreign trade companies’ concerns regarding raw material prices, exchange rate fluctuations, and shipping freight. We will continue to work with localities and related departments to implement comprehensive policies and promote solutions to the difficulties and challenges faced in this regard."
So, how long can the maritime industry continue to be hot when policy regulation is approaching? According to industry insiders, whether the epidemic can be effectively controlled will be the deciding factor.
