Industry information
China container export freight continues to rise! Shipping companies conspire to raise freight rates?
【Time:2020-08-31 11:20】 【Traffic:

 Container freight rates on Sino US routes continue to rise, and container shipping companies seem to be making a lot of money. Under the epidemic situation and adverse situation, are container shipping companies conspiring to manipulate freight rates?

Freight continues to rise! According to the latest data and reports provided by feightos Baltic index for Sindh maritime network, as of August 26, container shipping prices from China to the United States were still rising. But the pace of the rise has slowed.
Freight continues to rise! According to the latest data and reports provided by feightos Baltic index for Sindh maritime network, as of August 26, container shipping prices from China to the United States were still rising. But the pace of the rise has slowed.
As shown in the chart above, container freight rates from China to the United States are still rising, but this week the increase in freight rates from China to the west coast of the United States has slowed down, rising only 2%. Specifically, container freight rates from China to the west coast of the United States have risen 2% since last week to $3335 / feu. The freight rate is 161% higher than the same period last year. Container freight rates from China to the east coast of the United States rose 5% to $3892 a day, 50% higher than the same period last year.
As shown in the above graph, from June this year to the present, container shipping charges of Sino US routes have shown a trend of substantial increase. Recently, a number of container shipping companies, including Maersk, Herbert, HMM / Dongfang Gulf, one, evergreen shipping, Yangming shipping, Wanhai, Haifeng International, etc., have successively released financial reports for the first half of this year. The data show that, under the global epidemic situation, almost all shipping companies have bucked the trend and recorded more than their expected performance, and have achieved profits. Among them, South Korea's HMM has achieved its first quarterly profit for more than 20 consecutive quarters. In addition, it is worth mentioning that although the overall business of Yangming shipping in Taiwan was still in a state of loss during the reporting period, in fact, the company's loss was mainly caused by dry bulk cargo business. In fact, Yangming shipping's consolidation business in the second quarter of this year still achieved a profit of NT $560 million.
Is the increase in freight rates a conspiracy or something else? When talking about the performance that seems to have exceeded expectations in the first half of this year, almost all the shipping companies said that "the improvement of the company's performance is mainly due to the optimized arrangement of routes, the effective control of costs (including the oil price and the active cost control measures adopted to deal with the uncertain future under the epidemic situation), and the increase of freight Why are freight rates rising during the outbreak? The level of freight rate depends on the supply of transport capacity and the demand of freight transport.
A sudden surge in demand
Recently, especially since late July, this round of soaring freight rates has a more complicated logic. 2020 is a year when black swans fly and grey rhinoceros collide. The logic previously used in the shipping market will always appear periodic "logic failure" at some time this year. For example, in the first half of this year, the freight of crude oil shipping market rose sharply. It was originally expected that the sharp decline of global energy consumption under the epidemic situation would lead to a sharp drop in oil transportation prices. However, energy giants such as China hoarded oil (with a surge in freight demand) and speculative traders renting VLCC to store and transport crude oil at sea (the demand rose sharply and the shipping capacity was locked in) Freight rates have reached an unimaginable high in the first half of this year. The same is true for the consolidation market. In this extremely uncertain year, sometimes the demand comes so suddenly. Originally pessimistic about this year, the shipping companies that have withdrawn their charters, cut down on transport capacity and empty flights have suddenly found an unexpected surge in demand. Freightos said in a recent report that "demand is suddenly very strong, which is enough to push up freight rates." The development of things is so sudden. Remember the media reports a few months ago that Chinese manufacturers were facing bankruptcy due to lack of overseas buyers? This situation has not happened. At present, China's factories are in full swing, and Chinese goods are pouring into American ports in large quantities. Why do U.S. imports increase significantly? "People are still buying," says nerijus poskus, vice president and head of global shipping at flexport, a digital freight forwarder. Even the unemployed. They have the support of the government, so they are still rich. They no longer spend money on restaurants, haircuts, gas and commuting. But when they have cash, they will buy more. In particular, they buy more and more things online. Freightos's report also states that "the surge in e-commerce may be a driver of the increase in seaborne traffic." Poskus continued, "at the moment, including myself, a lot of people have left the city. For example, I bought a lawn mower and other household equipment I didn't need in the city. I believe there are a lot of people like me. " He pointed out that freight forwarders imported more bicycles, camping equipment, household goods and fitness equipment to the United States than before. As for furniture, he said, "old furniture companies that don't sell online are not doing well. Companies that are more innovative and sell online are doing better. Stores like IKEA are sold out. " In addition, under the influence of the epidemic, more personal protective equipment (PPE) is also being transported into the United States. "We see a second wave of imports of protective equipment," poskus confirmed "I would like to say that about 5-10% of the freight volume is PPE. All kinds of protective equipment, including masks. " Alan Murphy, CO CEO of sea intelligence, also expressed a similar view, "the first is the shift from service to physical goods, which will lead to the need to store a large amount of goods different from those previously sold. Second, restrictions on travel and regular travel may increase spending on consumer goods. "Finally, changes in the working environment make it necessary to work from home, which also encourages consumers to buy home office furniture." In the U.S. market, these factors are prompting importers to buy more goods from China because they can get the largest quantity of goods in the shortest time. There are also views that Chinese exporters are desperate to ship their goods to the United States for sale in the Christmas market before the expected outbreak of the second wave of covid-19.
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