Flame retardant fabric_Flame retardant fabric_Cotton flame retardant fabric_Flame retardant fabric information platform Flame-retardant Fabric News Sea freight increased by more than 12% in a week! Is the market that has been “falling and falling” “recovering”?

Sea freight increased by more than 12% in a week! Is the market that has been “falling and falling” “recovering”?

The container shipping market, which has been falling continuously since last year, showed a significant “recovery” in March this year. A reporter from Futures Daily le…

The container shipping market, which has been falling continuously since last year, showed a significant “recovery” in March this year. A reporter from Futures Daily learned that freight rates on the Asia-Europe route took the lead in stabilizing and rebounding in March, and have been rising for five consecutive weeks. In early April, trans-Pacific shipping rates began to rise slightly after continuing to bottom out. The early accumulation of empty containers at container ports has also improved significantly. Under the influence of port deployment and the recovery of cargo volume, the number of empty containers at the port has decreased.

The Shanghai export container freight index shows that the Shanghai-US West Route and Shanghai-US East Route increased by 12.5% ​​and 6.8% respectively in the first week of April, reporting at US$1,292/FEU and US$2,147/FEU. Some other routes also performed well. The routes to the Middle East continued to rise due to the concentrated shipments before Eid al-Fitr, and routes to South America also saw significant increases.

In this regard, Gao Mingyu, chief analyst of SDIC Essence Futures Energy, explained that the current recovery in freight rates to the United States and Europe reflects more of the resonance of the gradual recovery in cargo volume after the Spring Festival and the continued strict capacity control measures of liner companies.

It is understood that March and April are the time period for long-term container freight rate negotiations in the new year. However, this year, amid the sluggish spot freight rates, there have been major differences in the negotiations between cargo owners and shipping companies. Shipping companies have tightened supply and pushed up spot freight rates as their price support measures.

“According to the statistics of easy shipping schedules, the actual shipping volume on main routes in March was only about 87% of the planned shipping volume, slightly higher than 86% in February. The suspension strategy is still an important means of capacity control for liner companies.” Gao Mingyu said that from the perspective of actual shipping capacity, trans-Pacific shipping capacity continues to decrease, and the shipping volume of the European line, where freight rates have stabilized in March, has only increased slightly. The marginal reduction in supply, coupled with the seasonal rebound in exports brought about by the resumption of production and work after the Spring Festival, has contributed to the recent stabilization and recovery of freight rates in the US and Europe routes.

Since shipping demand is a derived demand from the economy and is therefore affected by economic cycles and cargo production cycles, the shipping market is also a typical cyclical industry. From the perspective of seasonal short cycles, each ship type has different seasonal characteristics due to the different cargos it transports.

“Since the beginning of this year, the volume of the container shipping market has continued to follow the past rules.” Gao Mingyu said that judging from the container throughput data of key ports of the Ministry of Transport, container volume declined significantly during the Spring Festival, and production and work resumed after the Spring Festival. Drive continuous improvement. The National Retail Federation NRF also predicts that U.S. container imports will rebound moderately from March to August. However, the current gap between supply and demand is relatively large, and the recovery in freight rates reflects more of the effects of liner companies’ continued contraction in capacity supply. In addition, the profit margins under the current freight rates of main routes are relatively limited, and the room for decline is very limited. The early freight rates have gradually entered the bottoming stage where the decline has narrowed.

“In April, container freight rates on the US-Western and European routes both rebounded slightly. Subjectively, we believe that container freight rates do not have the basis for a trend recovery, or are still oscillating at the bottom, and may hit a new low this year.” Huang Liunan, senior analyst at Guotai Junan Futures, said.

The reason for this judgment, Huang Liunan believes, lies in two core logics. First, the peak of new delivery capacity has not yet arrived.

“Judging from new orders for container shipping and existing shipyard delivery plans, the country may enter the peak of container shipping capacity delivery from June 6 this year, and supply may see a substantial growth by then. And from a full-year perspective, the extent of new shipping capacity this year will be Or more than 7%, more than twice the 3%-4% in normal years, and the highest level in the past decade.” Huang Liunan said.

Similarly, Gao Mingyu also believes that although there may be delays in delivery negotiated between shipowners and shipyards, the number is expected to be extremely limited, and ship dismantling is only concentrated in the field of small container ships. In her view, the current overall age of large container ships is relatively young. In addition, the financial situation of several major ship recycling countries such as Pakistan is poor. The market has a strong wait-and-see sentiment towards the dismantling of large ships. Ship dismantling is focused on the delivery of large container ships. The hedging effect remains to be seen.

Second, from the demand side, overseas markets are still in the active destocking cycle of durable goods and consumer goods, and it is highly likely that import demand will slow down in the medium to long term.

“In the United States, although the Federal Reserve’s interest rate hikes have gradually slowed down, the inventory cycle itself is very persistent. It is not difficult to find that by breaking down the new orders, wholesale, and retail inventory components of the United States and Europe, it will still be at a low level for most of 2023. The active destocking cycle has limited mid- to long-term increments,” Huang Liunan said.

“If we focus on demand in the United States and Europe, we will find that the current pressure on commodity inventories remains unabated, while inflation continues to erode consumers’ spending power.” In Gao Mingyu’s view, the current inventories of US retailers are flattening, but wholesalers’ inventories are It is still significantly higher than the long-term trend, which means that the backlog of channel goods is still relatively serious, and destocking is facing greater pressure. In Europe, overall consumer demand is still relatively weak due to continued inflationary pressure and the European Central Bank’s interest rate hike strategy. Lokomotiv Europe’s nominal retail sales in Germany expanded for the fifth consecutive month of decline in February.

Looking forward to the subsequent demand for logistics trade, Gao Mingyu believes that in the short term, the United States and Europe have not yet transformed from active replenishment to passive destocking, so…The trend recovery in prices is not supported by sufficient demand.

The market is currently looking forward to the arrival of the peak season in the third quarter. Importers may resume some peak season stocking and replenishment operations, and the container shipping market may reappear the traditional off-peak season pattern before the epidemic. “But the risk lies in insufficient consumption resilience and the resulting poor destocking. Therefore, whether upward support for freight rates in the third quarter still needs to be continuously observed,” she said.

In Huang Liunan’s view, the recent rebound in container freight rates has a certain degree of restorability, and some liner companies’ initiative to reduce shipping capacity has indirectly supported prices. However, in the medium to long term, there is a high degree of certainty that there will be excess shipping capacity in 2023, and it is difficult for container freight rates to improve.

“Among them, the prices of the European and American lines have even hit new lows with the peak of new capacity in the second half of the year and the arrival of the seasonal off-season of overseas import demand.” Huang Liunan said, it should be noted that the global macro economy will still face relatively high challenges in 2023. There is great uncertainty, and we need to pay attention to the disruption that geopolitical games and the outbreak of credit and debt risks in overseas economies may bring to freight rates.

Similarly, in Gao Mingyu’s view, freight rates on main routes such as the United States and Europe have a certain room for improvement, driven by a gradual recovery in cargo volume month-on-month and active price increases by shipping companies, but the room for a trend recovery is limited. As the overall activity of the market increases, inter-regional trade in Asia may see a more obvious rebound.

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Author: clsrich