The peak shortage of containers in January will increase to 600,000 TEU

Updated: Mar 31


China has 41 major industrial categories, 191 medium categories, and 525 sub-categories. It is the only country in the world that has all the industrial categories in the United Nations Industrial Classification, thus forming an unparalleled industrial system with complete industries, capable of producing clothing. All industrial products from footwear to aerospace, from raw materials and minerals to industrial base machines, have become an important source of China's competitiveness, as well as the foundation and motivation necessary for further upgrading of the industry.


In addition, China is the largest trading nation in 128 countries or regions in the world, and this is still expanding. East Asian countries, including China, Japan, South Korea and ASEAN countries, have close economic and trade ties. Among them, the supply chains of ASEAN countries are closely integrated with China, and the process of integration of China and ASEAN's industrial chains and value chains is actually a process of mutual benefit and win-win results.


According to data released by the General Administration of Customs of China, in the first two months of this year, the total value of trade in goods between China and ASEAN reached 594.11 billion yuan, a year-on-year increase of 2% and accounting for 14.4% of China's total foreign trade.As a result, ASEAN surpassed the EU and became China's largest trading partner.


Since the beginning of this year, in the face of the sudden epidemic, China has introduced a series of policies to stabilize foreign trade and foreign investment in a timely manner. Various companies, including foreign-funded enterprises, have made arduous efforts. "Made in China" has withstood the test, and China has used practical actions. Maintain the stability and security of the global industrial chain supply chain.


People are buying Chinese goods crazily

In the context of this powerful country with the entire industry chain, 2020 will end in such a way that the world is crazy to buy Chinese goods. In the past November, China’s exports grew by 21.1% and the trade surplus was US$75.4 billion, the highest level since 1981. Yes, the highest value in 40 years!

This is a graph of export value (monthly, million dollars)

Almost from the lowest point in 10 years to the highest point in 10 years.


Another amazing data is the soaring speed of the CCFI (China Export Container Freight Index) index.

Because foreigners are buying Chinese goods crazily, the freight rate per container (FEU) continues to soar.

From Asia to Northern Europe, the spot freight rate has hit a record high, and it is expected that the contract freight rate will rise sharply next year, which may lead to a large number of orders cancelled next year. Retailers in Europe are worried that the epidemic will continue to block sales in the video market, and the huge ocean freight and surcharges charged by shipping companies have further added to their concerns. At present, the freight shipping company's offer from China to the UK in January was US$10,000/40'HC. A source said that “it is said that there has been an offer of US$13,500”. "Because the shipping cost is too high. Customers have started to cancel reservations"


Lack of container, price increase -> charter ship, producing containers

Last time we posted an article about DSV chartering and Ocean Container Manufacturing. Recently, there were reports that another freight forwarding and logistics giant, DHL Global Forwarding, is also considering chartering and chartering to deal with current market changes.What caused these big companies to make these moves? According to sea intelligence analysis, the only possibility that the container shortage will be resolved before the Chinese New Year in February is whether the shipping companies will continue to purchase new containers and actively reposition empty containers. However, the analyst pointed out that the shortage of containers has not yet reached its peak, and predicted that the shortage of containers in Asia in January will increase by 600,000 TEU from December.


Carrier with container will be an advantage

Due to the increasing demand for Asian imported goods in Europe and North America in the second half of the year, a serious imbalance in the shortage of containers is hitting all types of shippers from retailers to manufacturers. Costco, a major retailer, told investors last week that a shortage of containers at Asian origin ports is delaying the loading of imported goods. Costco Chief Financial Officer Richard Galanti expects that the pressure of container shortages will continue until February and March.


A spokesperson for the Maersk Group said that in the past six months, the company has purchased or leased as many containers as possible, with a focus on the 40-foot tall containers that are in high demand.So far, Maersk has increased the 40’HC by 9.7% and expects to increase it by 2% in 2021. Hapag-Lloyd increased 8.7% this year through the purchase or lease of approximately 250,000 TEU containers. John Butler, President and CEO of World Shipping Council Liner Shipping, said: “Ship capacity has been fully utilized and there is almost no surplus. Increasing ship capacity without additional containers will only make the situation worse.”


China-Europe train gets a share from the current situation

"Qingdao Evening Newspaper" reported that shipping prices are rising rapidly, and many foreign trade companies have turned their attention to land transportation. In recent years, the fast-growing China-Europe Express has become the choice of many foreign trade companies.Statistics show that since the beginning of this year, the volume of China-Europe Express trains has skyrocketed.By the beginning of November, the annual number of China-Europe trains exceeded 10,000, which has exceeded the level of last year and set a new record. One of the most popular areas for the China-Europe Express is Yiwu, the capital of China's small commodities.


According to a report by China Business News on December 14, Xu Xing, the first-level inspector of the Zhejiang Provincial Development and Reform Commission, said at a press conference on November 24: "At present, the Yixin-Europe Railway has achieved two platforms in Jinhua and Yiwu. The annual mission target of 1,000 trains was completed two months ahead of schedule this year.” According to the data, as of October 21 this year, the "Yixinou" train has operated 1,000 trains and shipped 83,000 TEUs, a year-on-year increase of 203%. Shipment volume accounts for about 10% of China's total.

In June 2017, the China-Europe (Qingdao) train started from the China Railway Container Qingdao Central Station and has been in operation for 3 years. Qingdao Jie Su Hang International Logistics Co., Ltd. is an international logistics company mainly engaged in China-Europe Express Lines. The company’s person in charge, Wang Peipei, told reporters that starting from the second half of this year, China-Europe Express Lines departing from Qingdao began to experience tight space. Customers have turned to China-Europe Express because of the increase in shipping prices. Normally, the transportation price of China-Europe Express is higher than that of ocean freight. However, due to the rapid increase in ocean freight this year, the price of some routes is already lower than that of ocean freight. It is understood that the current price of a container from Qingdao to Europe for the China-Europe Express train is between US$3,000 and US$4,000, which is the same as that of ocean shipping. Wang Peipei introduced that as more and more foreign trade companies choose the China-Europe Express, the booking period is getting longer and longer. Previously, the China-Europe Express would normally be booked 22 days in advance, but now it must be booked at least one month in advance.


Conclusion

Based on multi-party analysis, the shipowner, as the carrier, is the third-party carrier among the buyer and seller. Container carrier, or as a freight forwarding logistics company, needs to effectively evaluate, obtain agency third-party resources, design the best plan and provide a fourth party for professional implementation. The difference in operating philosophy and culture is still very different from that of third-party carriers, and providing the most reliable service is still the mission of freight forwarding logistics companies.


Container carriers are neither a substitute nor a substitute for any third party. The thinking and standpoint of operation will be more from the perspective of the customer and the market. For example, at this moment, it is not to replace the shipowner to charter, but to make up for the shortcomings of the third-party carrier's lack of containers and the huge number of boxes that cannot be quickly responded to in global dispatch. The role of freight forwarder is indispensable at any time, just like the capillaries of the body, which smoothly and tirelessly provides the ability of Weibo to help the large blood vessels flow and restore the order of the world as soon as possible.


"Multimodal container carriers" correspond to car-free carriers. They have passed certain qualification certifications. Some companies that meet the requirements enjoy the same price policy as railway containers for container launches and upper-China-Europe trains, thereby encouraging more More social capital invests in the manufacture of multimodal transport equipment, alleviating problems such as the difficulty of using containers, and the manufacturing industry also benefits at the same time.


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