Industry news
The current price is three or four times what it was before the epidemic
Time:2021-05-20; Read:2434

Photo / Xinhua News Agency

"Is the freight rate not over yet? It's already too high." Zhou Ming (pseudonym), the person in charge of a foreign trade company in Tianjin, is very upset recently. The market is rumored that shipping companies will begin to charge peak season surcharges from June. Know whether to wait and see or grab a seat first.

On May 21, the China Export Container Comprehensive Freight Index released by the Shanghai Shipping Exchange was 2,216.63 points, an increase of 3.9% from last week. The Shanghai Export Container Comprehensive Freight Index was 3,432.50 points, an increase of 2.7% from the previous period.

For freight rates that frequently climb to new highs, the industry is at a loss. Wang Muxin of Beijing Hao Limo Law Firm bombarded these liner companies to continuously increase freight rates, which not only offset the country's original intention to abolish port construction fees, but also greatly increased the operating costs of import and export enterprises. He believes that the shipping alliance may be conspiring to raise prices. A few days ago, the Korean Fair Trade Commission has decided to conduct antitrust investigations against a number of South Korean liner companies such as HMM and Xingya Shipping. The Chinese anti-monopoly agency should also use legal means to prevent such actions by liner companies operating in China.

The worries of small shippers

 "The current price is three or four times that before the epidemic," Zhou Ming told reporters that his goods mainly run on the eastern route of the United States. At the end of last year, the freight rate has doubled from before the epidemic. The price at the end of last year can be maintained, but since April, the space has been tight again, and the price has started to soar. The price of a 20TEU small cabinet has risen to 7,000 US dollars, and the price of 40TEU in May is as high as 13,000 US dollars.

 Every April, it’s the time for cargo owners and shipping companies to sign a new year’s contract. In previous years, shipping companies always came to negotiate early and asked cargo owners to promise cargo volume and lock the cabin. Unexpectedly, this year the shipping company was uncharacteristically and would not take the initiative to ask questions. The shipping company canceled this year’s long-term agreement and all implemented the market price.

 Zhou Ming's company can only get a small amount of space, which accounts for only 20-30% of its demand, with many years of relationship. The rest has to go to the market to find space to fill the needs. The freight price of the long-term agreement signed with the shipping company is much lower than the market price. Take Zhou Ming’s contract price as an example. He got different long-term agreement prices from different shipping companies. He also went to the East of the United States. State-owned enterprises like COSCO SHIPPING would give very low prices per box due to their social responsibility. Only 4000-5000 US dollars, but other shipping companies are more expensive, there are 6000-7000 US dollars, and there are more than 8000 US dollars, but overall it is still much cheaper than the market price of 13,000 US dollars.

 However, although the long-term price of the shipping company is low, there are too few spaces. With so many shipping companies, Zhou Ming can only get 5 or 6 container spaces per week. Other gaps need to be found at market prices. "The price during this period of volatility is like an auction. If the price is low, it won't work, but the higher price will get it." Zhou Ming said that the first time he came into the business, he encountered strange things that could be recovered when the cabin was released, "because the original offer was lower. , The freight rate went up again after the shipping date, and the shipping company took back the space promised to Zhou Ming and sold it again."

Why does the freight rate climb to a new high?

Zhou Ming's anxiety resonated with thousands of small cargo owners.

 Cai Jiaxiang, executive vice president of the China Shippers Association, said that the increase in freight rates will definitely affect the profits of cargo owners, and some cargo owners have even paid nearly 10 times the freight. Faced with high freight rates, Li Zhimin, vice president and secretary general of the China International Freight Forwarders Association, believes that my country’s foreign trade companies will ultimately suffer. “Freight forwarders can not do it if they lose money, but foreign trade companies will face claims if they don’t sell the goods.”

On April 29, the Ministry of Transport replied to a complaint from a small cargo owner in Shandong that due to the superimposed effects of multiple factors, the demand for international container transportation has been concentrated since June 2020. The major liner companies have basically invested in all ship capacity except for the necessary repairs and maintenance. market. Affected by factors such as insufficient labor caused by the spread of the epidemic abroad, ports in the United States, Europe and other places have experienced serious congestion since the fourth quarter of 2020. For example, the most congested ports in the United States, Los Angeles and Long Beach, are currently waiting for more than 30 container ships, 85% Ships need to be anchored for at least 8 days before they can operate; container cargo can stay at the terminal for up to 2 months. However, European routes generally call at multiple ports. Due to congestion in the main ports of call, the entire voyage time is prolonged. The congestion of foreign ports, the disorder of the logistics supply chain and the reduction of efficiency have caused large-scale delays in container liner schedules. The on-time rate has dropped from more than 70% to the current 20%, which has seriously affected the operational efficiency of container ships and aggravated the container ship schedule. The contradiction between shipping capacity and empty container supply and demand.

 The recovery of the global economy has led to a rebound in shipping demand and has driven shipping prices to rise. Moreover, the Suez Canal incident caused limited capacity and decreased short-term supply, which led to an acceleration in shipping prices. In fact, in addition to the surge in container shipping prices, at the end of April, the Baltic Dry Bulk Index also rose to a new high since 2011, reaching 3053 points.

 Therefore, the Ministry of Transport stated that the current ship’s tight capacity, shortage of empty containers, and rising freight rates have become global issues. Vietnam, India, South Korea and other countries have also seen rapid increases in freight rates. The freight rates of some major routes have exceeded those of our country. . In response to the above situation, the Ministry of Communications attaches great importance to actively coordinating relevant liner companies to optimize the allocation of shipping capacity on Chinese routes, increase the capacity of Chinese routes and the return of empty containers, and minimize the large-scale delays in shipping schedules caused by congestion in overseas ports. influences.

 It is worth noting that the current factors affecting shipping prices have not yet considered the risk of crew shortages. However, after the epidemic in India has worsened, there has been a situation in which infected crew members have caused the rapid spread of the epidemic on ships. At present, the ports of Singapore and the United Arab Emirates have banned ships from changing their crews recently from India, and my country’s Zhoushan Port has also banned the entry of any ships and crews that have visited India and Bangladesh. According to relevant statistics, there are 1.6 million seafarers in the world, of which 240,000 are from India, accounting for about 15%. Once these crew members are unable to work normally, it will not only disrupt the scheduling plan of the shipping company, but may also cause a surge in the wages of other countries' crews due to the lack of Indian crew members.

 The shipping industry called for the popularization of vaccines among the crew as soon as possible. COSCO SHIPPING responded to the 21st Century Business Herald that the company’s main ship arranges crew members on board, and the vaccination rate has risen from 3.1% in January to the current 100%; stay ashore The crew has also been dispatched to meet their needs.

 Lawyers bombarded shipping companies for price increases

 What makes Zhou Ming and other small cargo owners and small freight forwarders more worried is that the current freight rate is "high fever and non-refundable", and many shipping companies are brewing a new wave of price increases, which will take effect on June 1.

 For example, on the Pan Pacific route, MSC notified that the 20TEU cabinet would increase by 800 US dollars, the 40TEU cabinet would increase by 1,000 US dollars, and CMA CGM would increase slightly by 900 US dollars and 1,100 US dollars respectively. Zhou Ming worries that the value of their company's products is quite high, and the freight has already accounted for 40% of the cost. Those companies with very low value may have a higher percentage of freight, and the profit is unimaginable.

 Beijing Haolimo Law Firm Wang Muxin worked in a shipping company in his early years, and later obtained a lawyer’s license, and has always been concerned about the shipping industry. He believes that the current capacity imbalance is due to market factors, but there are also shipping companies who are inaccurate in their judgment, not actively increasing capacity and trying to increase the inventory of empty containers, but deliberately creating various excuses to drive up the freight rate. Take Yantian Port to New York, the United States as an example. A 40-foot heavy container is exported from Yantian to New York. The freight rate is USD 2,300 before the beginning of 2020. As of May 2021, the freight rate has soared to USD 12,750. In one year, the freight rate has increased by 5.54 times.

 He pointed out that in order to effectively reduce the burden on shipping companies, the state has cancelled a number of shipping fee items, especially during the epidemic period, vigorously cut or waived port construction fees and other port fees in order to ensure the normal operation of enterprises. However, because liner companies continue to increase freight rates, it has not only offset the country's original intention to abolish port construction fees, but also greatly increased the operating costs of import and export enterprises.

 At the same time, the profit of shipping companies in the first quarter reached new highs. Wang Muxin said that from the perspective of shipping finance, if the ratio of annual net profit to operating income of a shipping company reaches 3% to 5%, it is considered a good adult. However, Hanxin Shipping's profit margin has reached 42%, and Evergreen Shipping's profit margin has reached 14%.

 Wang Muxin believes that the liner companies will transfer the responsibility for the shortage of capacity caused by their own reduction of capacity to the cargo owner, increase the freight rate on the grounds of tight market supply and demand, and then fabricate the tight market atmosphere of empty containers, resulting in a situation where one box is hard to find. The shipping alliance confirmed Suspected of collusion or coordination. A few days ago, the Korean Fair Trade Commission has decided to conduct antitrust investigations against a number of South Korean liner companies such as HMM and Xingya Shipping. The Chinese anti-monopoly agency should also use legal means to prevent such actions by liner companies operating in China.

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