Summary:
The super bull market in the container transportation industry stems from the unexpected demand, which leads to the continuous disorder of the supply chain. Looking back on the past decades, among the three shipping sub industries of centralized transportation, dry bulk transportation and oil transportation, the price elasticity of centralized transportation is the most limited. In the past two years, the freight rate of container transportation has soared more than tripled, and the container transportation market has staged a record super bull market. Similar to the previous shipping super bull markets, this round of centralized transportation super bull market also stems from “demand accident” – the import demand of the United States continues to be stronger than expected under the epidemic. The supply chain lacks supply elasticity. Since 2020q4, the centralized transportation market has fallen into supply chain disorder, and the high loading rate has supported the freight rate to hit new highs. Under high freight rates, the profitability of container shipping companies has reached a record high, which has rarely affected the export structure.
Demand side: the growth rate of goods on the US line has dropped, and we should be vigilant against the risk of demand inflection point. The “unexpected” high growth on the demand side is the origin of this business cycle. Affected by covid-19 epidemic, driven by many factors such as housing economy and fiscal stimulus, the volume of goods on the US line has increased higher than expected since 2020q4, and remained strong in 2021, with an increase of 29% over 2019, significantly higher than the long-term growth center of only 3.6% in 201419. It should be noted that since 2022, the growth rate of us line cargo volume has dropped from a high level compared with 2019. Considering the weakening impact of the US epidemic, the US retail inventory has been significantly replenished, and the visibility of export orders in the second half of the year is limited, it is suggested to be vigilant against the risk of demand inflection point.
Supply side: the efficiency of the supply chain has been gradually improved, and the congestion of the west American port has been continuously improved. The duration of the supply side “bottleneck” will determine the duration of the business cycle. Ten years ago, Europe and the United States completed manufacturing outsourcing and containerization. In the past decade, the centralized transportation supply chain has been used to low-speed growth, and some links seriously lack supply elasticity. Port congestion is the core supply bottleneck and consumes the effective capacity of centralized transportation. Behind this is the slow improvement of multi link production capacity of the US China land supply chain under the epidemic. With the weakening of the impact of the epidemic in the United States, the supply bottleneck is gradually easing. Since 2022, the congestion of the west American port has continued to improve, and the number of ships waiting to berth in Los Angeles port has dropped by more than 70% from the high level. It is expected that the efficiency of the supply chain will continue to improve gradually.
Maintain the “neutral” rating of the container transportation industry. Since May 2020, Guojun transportation team has mainly recommended the centralized transportation industry. In the past two years, Cosco Shipping Holdings Co.Ltd(601919) share price has increased by nearly ten times. Over the past year, the centralized transportation market has maintained a high boom, and the duration of disorder has exceeded our expectations. With the weakening of the impact of the U.S. epidemic, the high volume of goods on the U.S. line has slowed down, and the congestion of ports in the west of the United States has significantly improved. Superimposed on the short-term disturbance of the Chinese epidemic, the container freight rate has fallen recently. At present, the centralized transportation market is still at a high level of cyclical prosperity. It is expected that the net interest rate of the centralized transportation company is expected to remain high in the first half of the year, while there is an uncertain risk of the sustainability of the high prosperity of the industry in the second half of the year. Considering the market expectation and risk return ratio, maintain the “neutral” rating of the container transportation industry.
Risk warning. Repeated epidemic risk, new ship order risk, antitrust risk, economic fluctuation risk and export price transmission risk.
