Why The Sea Freight Anti-season Rise

Traditional off-season prices double Why the sea freight anti-season rise

Since the first quarter of this year, shipping prices have shown a rapid rise. Taking the European line and the United States line as an example, within a short period of one and a half months, the freight has doubled to $8,000 / box, which not only makes the outside world dumbfounded, but also many industry insiders are shocked.

It should be noted that this wave of price increases occurred in the traditional off-season of foreign trade, what are the driving factors behind it? What impact will it have on foreign trade enterprises and international logistics? Relevant market players pointed out in interviews with reporters that this wave of "anti-season" price increase is affected by multiple factors, and the price increase exceeds industry expectations, which to a certain extent affects the normal production and operation rhythm of small and medium-sized cargo owners and international logistics companies.

Partial route rates

Double in a month and a half

"Since the middle of April this year, the sea freight has continued to rise, and the price has changed almost every week, and our workload of explaining and communicating with customers has increased a lot." Ms. Tang, the person in charge of an international logistics company in Foshan, Guangdong, told the Securities Times reporter that a teUS price from Shanghai to Rotterdam port is between $7,500 and $8,000 in late June, which has doubled compared to a month and a half ago, and the same situation also appears in the North American line.

Following the rise in freight rates on European shipping lines due to the Houthi armed incident in October last year, a new wave of freight price increases has once again affected China's foreign trade import and export industry since April this year. The reporter learned from the international logistics industry that in the past two months, Maersk, DFA, Hapag-Lloyd and other head shipping companies have issued price increase letters, some routes have increased by nearly 70%, a 40-foot container, the freight rate rose up to $2,000.

This wave of freight price increases has been reflected in the shipping index. The reporter inquired the official website of the Shanghai Shipping Exchange to learn that on June 14, China's export container freight index rose 8.8% to 1733.47 points, of which, compared with last week, the highest increase is South Africa route, Southeast Asia route, Bohong route, West America route, Europe route, East and West Africa route. They rose 27%, 11.9%, 11%, 9.6%, 9% and 8.3%, respectively.

From the northern international container freight index, it closed at 2317.81 points on June 17, up 9.1% from June 3. From the specific route price point of view, the market reference price of the 40-foot long standard container from Tianjin to South America, Europe, the Mediterranean and the east and west coast of the United States is ranging from $7,000 to $9,000, of which, the price of Tianjin to South America East base Hong Kong is even as high as $9062 / box.

Reporters learned that since the outbreak of the Red Sea crisis last year, several major shipping giants have been brewing price increases, and have issued price increases several times, but the industry is still unable to predict the increase. "A $300 or $400 increase is normal, but a $1,000 or $2,000 increase is not." Ms Tang said.

Multiple factors superimposed

Market sentiment helped the rally

In fact, every year in March and April is the shipping off-season, and the peak season opened in July, and the current off-season has appeared in the phenomenon of tight shipping space and rising freight, what factors are behind the promotion?

Comprehensive analysis of interviewed industry experts, there are roughly the following four reasons: First, the European route has been affected by the Red Sea crisis for a long time, ships have to go around Africa, but the African line capacity was originally limited, this year also flooded a large number of ships, shipping time is long, transit ports are increased, and some transit ports are congested, resulting in a long return cycle of many ships. Second, the South American line is also increasing prices because car companies expect Brazil to impose tariffs on China's new energy vehicles in the future, and many car companies have gone to South America, and the demand for South America line has increased; In addition, some shipping companies in order to car companies large orders, removed the ship running West Africa to run South America, resulting in insufficient capacity of the West African line, freight rises. Third, the industry's expectation that the United States will impose tariffs on some Chinese goods is also very strong, leading some importers to stock up in advance and bring forward the peak season. Fourth, several giant shipping companies have banded together to raise prices, and export companies need to plan their shipping plans in advance, so they are robbing containers.

Zhong Zhechao, founder and CEO of One Shipping, analyzed in an interview with a Securities Times reporter that compared with last year, this year's European and American lines have recovered significantly, especially since the market demand has increased from mid-April, but according to the shipping company's previous shipment rules, they will be suspended in the second week after the "May Day" holiday, resulting in a temporary imbalance between supply and demand in the market.

In Zhong Zhechao's view, this wave of price increases is not so much driven by the quantity of goods, as it is driven by emotions, "many aspects of information to the market to release an anxious mood, shipping companies also have more reasons to group price increases, resulting in the past two months unilateral upward price of the seller's market."

Even shipping giants are feeling the market's anxiety. Rolf Habben Jansen, chief executive of Hapag-Lloyd, the world's fifth-largest container liner, also described the recent sudden rise in freight rates as "unexpected and shocking" when he presented first-quarter results in May. He believes that the Red Sea crisis is not the main reason for the increase, but the nervous shippers may be an important reason. Due to a variety of uncertainties, buyers are trying to bring things in early, resulting in an early peak season.

Prices may level off in July

It should be noted that in each wave of freight price increases, the first to be affected is the majority of small and medium-sized enterprise cargo owners. "Many of the companies we contact say they can't afford to ship under the soaring freight costs. The freight to Europe plus other costs is about $10,000, and they may not even have $10,000 for a box of goods." Zhong Zhechao told reporters that in China's foreign trade exports, shipping accounts for the largest proportion, and sea freight continues to rise, which has a greater impact on the vast number of export-oriented small and medium-sized enterprises.

"Our customers in Brazil see the cost has risen, temporarily do not arrange the shipping date, then we can not start production, which will cause us a certain inventory of raw materials." Ms. Zhong, the person in charge of an aluminum trading company in Foshan, told reporters that the rise in freight costs disrupted the original production and shipping cycle, and further compressed profits.

In addition, freight increases also have a certain impact on freight forwarding companies and logistics companies. "Because the price is very volatile, the customer orders today's price, and the price changes a few days later, we may have to make a little price concession for the sake of customer experience, and increase a lot of communication costs." Ms Tang said.

How long will the price rise last? Insiders believe that multiple factors determine the next price trend. First of all, from the perspective of market supply and demand, the reporter noted that shipping companies including MSC Mediterranean Shipping, COSCO Shipping, CMA, Orient Overseas and other shipping companies have announced that there will be new ships launched, "the current proportion of suspension has been very small, most of the ships are in normal operation, plus the launch of new ships and new routes, to a large extent will relieve market tension." Zhong Zhechao said.

Commenting on the capacity shortage, Rolf Habben Jansen said the situation would not last until the end of the year. He also urged shippers not to book more space than needed to ensure their goods arrive, as this would only make the capacity shortage worse.

Zhong Zhechao also said that this round of shipping prices in the short term has reached a very large increase, do not have the basis to continue to rise sharply, it is expected that after mid-July, the market will return to a state of dynamic balance, "may not fall immediately, but at least no longer continue to rise, in the short term or will maintain high volatility." Zhong Zhechao suggested that the majority of small and medium-sized enterprises and shippers should synthesize multi-party information, rationally view and objectively analyze the market supply and demand situation, so as to make rational countermeasures.

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