At the beginning of the new year in 2022, the sea freight price is still adjusted at a high level and has not fallen back to before the epidemic.
According to the Baltic Sea Freight Index (FBX), as of the morning of January 19 Beijing time, the sea freight prices of China / Southeast Asia North America West Coast and China / Southeast Asia North America east coast were US $14603 / feu (40 foot standard container) and US $17488 / feu respectively, while the container shipping from China to Europe is also above US $10000 / feu.
Many industry experts interviewed by the first finance and economics reporter pointed out that even if the epidemic ended, the shipping price could not return to the past, and the long-term price center level of the industry may have moved up permanently.
Now is the most profitable time for the capital intensive industry of shipping in recent ten years: according to the data of blue alpha capital, an authoritative consulting company in the industry compiled by foreign media, it is expected that the shipping carrier will obtain a profit of US $150 billion in 2021 – after 10 years of hard struggle, the annual profit of the shipping industry has increased nine times
the most profitable time for shipping companies
In the ranking of the top 100 global liner companies in 2022, Maersk handed over the first throne to Mediterranean Shipping Company (MSc). According to the latest data of alphaliner, a French shipping consulting agency, the top five global transport capacity are mediterranean shipping company, Maersk, Da Fei ship, COSCO Shipping and Herbert.
Mediterranean shipping company is a family owned private enterprise headquartered in Geneva, Switzerland. It currently has 570 ships and more than 100000 employees. Maersk and other companies are listed companies.
Taking Maersk as an example, the annual profit in 2021 is expected to reach or exceed its comprehensive performance in the past nine years. Just recently, Maersk raised its performance expectations. It is expected that the annual actual EBITDA in 2021 will be US $24 billion, the actual EBIT will be US $19.8 billion and the free cash flow will be US $16.4 billion.
Good performance supported the collective rise of shipping stocks, and Maersk and Herbert’s stocks hit an all-time high this year. As of January 18, Maersk’s price per share on the Copenhagen Stock Exchange was DKK 22940 (about US $3490). In the last year, the price of the stock has risen by 51.4%.
In October 2021, Maersk’s share price fell to a five month low, but soon reversed the trend and continued to rise. On January 12 this year, the price per share once rose to DKK 24800.
As of January 18, Herbert’s price on the German Stock Exchange was 267 euros per share, up 144.5% in the latest year. At the beginning of this year, the stock price of Herbert was close to 290 euros, but it has declined recently.
soaring transportation costs and inflation risks
According to the data of alphaliner, a French shipping consultancy, from April 2021 to early January 2022, the total TEU capacity across Atlantic China Welding Consumables Inc(600558) , across The Pacific Securities Co.Ltd(601099) and Asia Europe increased by 12%, of which the capacity across The Pacific Securities Co.Ltd(601099) increased by 17%, and the world’s top 10 shipping companies increased by 1.1 million TEU in the past nine months, increasing the total number of active ships by 2%. In addition, these shipping companies also ordered a supplementary capacity of 4.3 million TEU, but it has been proved that the problem of shipping is still a challenge and has spread to the field of economy and people’s livelihood.
Soaring transport costs have led many economists to warn that persistently high transport prices are fuelling inflation and casting a shadow over the economic recovery. High freight costs, which in the past only led to a temporary rise in inflation, are now in danger of evolving into a long-term economic feature of the United States and other economies.
Nicholas sly, an economist at the Kansas City fed, found in his research that in the past, when transportation costs increased by 15%, core inflation would increase by 0.10 percentage points a year later.
“Freight is now a lasting, not a temporary challenge.” This type of impact tends to have a lasting impact after 12 to 18 months, sley explained.
At present, the US inflation rate remains high. According to the data released by the U.S. Department of labor on January 12, in December 2021, the U.S. consumer price index (CPI) increased by 7% year-on-year, which was more than 5% for seven consecutive months and the largest increase since June 1982.
Among them, the core CPI excluding energy and food prices rose by 5.5%, the largest increase since 1991. Rental housing, second-hand cars and food are the main areas of price rise.
In addition, the employment breakdown data show that in December 2021, 18700 new jobs were created in the U.S. Transportation and warehousing industry, down 56% from 42200 in November. There is a huge gap between dockers and truck drivers. U.S. ports continue to be blocked, and the phenomenon of “port congestion” has not been lifted so far.
As of the 19th, according to the data of the Southern California Maritime exchange, there are 99 ships berthing outside Los Angeles port and Long Beach port, 6 fewer than the record 105 ships on January 6. The first financial reporter inquired the historical data and saw that the number of waiting berths in the same period last year was only about 30.
A senior official of an international freight company told the first financial reporter that they often share a map indicating the location of blocked ships all over the world. Basically, people with dense phobia can’t see it.
The senior official said that in the major ports of various countries, it takes more than 7 days for ships to unload goods after landing. “Moreover, the transportation industry is a circular journey. Take the West Coast route of the United States. Previously, a ship arrived in the United States after 13 ~ 14 days, and then shipped back two days after unloading the goods, that is, it can run back and forth within a month. But now, the time of each link is extended by half. In the past, it could run three times, but now it can only run two times.”
She said that this means that even if all ships are on the road, it is difficult to keep up with the effective transport capacity: it is necessary to wait for the unloading port and then come back with empty containers or imported goods. However, it takes about one week to 10 days. In the past, it used to run back and forth once a month, but now it takes one and a half months. The effective transport capacity is equivalent to a one-third discount.
In this context, can prices return to pre epidemic levels? The senior official said that the analysis within the industry is that the price will tend to be basically normal by the end of 2022. “This means that when you want to ship goods, there are positions and boxes. However, we don’t know whether the freight rate can fall back to before 2019.”
Han Jun, chief analyst of China Securities Co.Ltd(601066) transportation, previously said in an exclusive interview with China business news that the current high shipping price is not normal, but if it is expected to return to the level of 2019, industry insiders believe that the probability is very low.
“Therefore, the current market price is not entirely the result of bid up. We should avoid reaching such a conclusion. On the one hand, the price rise is driven by the real difference between supply and demand in the market; on the other hand, the ship rental cost and empty container transportation cost have also increased several times or even more than ten times.” Han Jun said.
Earlier, Shu jueteng, a spokesman of the Ministry of Commerce, said in response to a question from the first finance and economics reporter that at present, the development of foreign trade still faces many uncertain, unstable and unbalanced factors. The global epidemic fluctuates repeatedly, the international situation is complex, the shipping is not smooth, the chip supply shortage and other problems are difficult to be fundamentally alleviated in the short term, and the comprehensive cost of enterprises remains high, Foreign trade operation faces great pressure. Therefore, we should effectively ensure the stability and smoothness of the foreign trade industry chain and the supply chain. She said: “we will implement the action of unblocking foreign trade, work with relevant departments to unblock international logistics, promote direct passenger docking between shipping enterprises and small, medium and micro foreign trade enterprises, and continue to promote smooth settlement.”
