Core data in this article: container shipping prices, freight rate indices, number of vessels, container output, export volume
1. Container shipping freight rates have soared since the outbreak of the pandemic
Since last year, global container freight rates have soared as if riding a rocket. Bloomberg reported that before the pandemic, most shipping analysts could not have imagined that each container from Asia to the United States would be charged USD 10,000 per container. According to Drewry data, between 2011 and March 2020, the average freight rate from Shanghai to Los Angeles was less than USD 1,800 per container. From July 2021, quoted prices for shipments from China to major ports in Europe and the US West Coast approached USD 12,000 per container, and some companies said they were ultimately charged USD 20,000 before the cargo was loaded on board.
2. Freight rate indices continued to rise to new highs in 2021
According to statistics from the industry consulting agency Container Trades Statistics (CTS), the average China Containerized Freight Index (CCFI) in 2020 was 984.4 points. By the first half of 2021, the average CCFI was 2,066.64 points, up 133.86% year on year. By August 2021, the China freight rate index continued to soar and had reached 2,978.47 points.
3. Freight rate indices on European and Mediterranean routes grew relatively fast
In 2020, the average freight rate index on the European route was 1,158 points. By June 2021, the European freight rate index had reached 4,066 points, up 15.2% month on month; the Mediterranean freight rate index rose from 1,353 points in 2020 to 4,811 points.
4. In recent years, China's ocean-going vessels have decreased, but container slots have continued to increase
Is the surge in container shipping prices caused by reduced supply? Next, Forward will analyze this from both the supply side and the demand side.
From the supply side of China's ocean-going vessels in recent years, China's ocean-going transport vessels showed a downward trend from 2016 to 2020. In 2020, the number of China's ocean-going transport vessels was 1,499, down 9.9% compared with 2019. Compared with 2016, the number of ocean-going transport vessels in 2020 decreased by about 900, a decline of 39.8%.
Although the overall number of ocean-going transport vessels has decreased in recent years, the container slots of China's ocean-going transport vessels have continued to climb since 2018. In 2020, the container slots of China's ocean-going transport vessels reached 1.808 million TEU, up 48.9% year on year. Therefore, the decrease in ocean-going vessels was not the main reason for the surge in container shipping prices in 2020-2021.
5. China's container supply has generally decreased over the past two years
From the container supply side, from 2013 to 2014, world merchandise trade grew moderately, and China's metal container output also increased somewhat. In 2014, metal container output reached 130.145 million cubic meters, up 26.29% year on year, the highest output and largest increase in recent years. In 2019, affected by the global economic slowdown and tense international trade situation, metal container output fell sharply. In 2020, China's metal container output was 88.115 million cubic meters, up 21.76% year on year, but compared with 2013-2018, China's metal container output in the past two years remained at a relatively low level.
From 2012 to 2020, changes in the export volume of China's container manufacturing industry were basically consistent with changes in China's container output. From 2012 to 2014, world trade grew steadily, international shipping market demand for containers increased, and China's container export volume continued to rise. Since 2015, China's container export volume began to decline. In 2016, China's container export volume was 1.99 million, down 26.77% year on year, the lowest export volume and largest decline in recent years. Affected by the global economic slowdown, China's container export volume decreased from 2018 to 2020. In 2020, China's container export volume was 1.98 million, down 18.18% year on year.
6. Demand in China's container transport market is rising slowly
From the demand side, demand in China's container transport market is rising slowly. From 2016 to 2020, the container throughput of ports above designated size in China rose year by year, reaching 264.30 million TEU in 2020, up 1.2% year on year. Among them, coastal ports completed 234.29 million TEU, up 1.5%; inland river ports completed 30.01 million TEU, down 0.5%.
7. Vessel congestion at ports and reduced container turnover efficiency are the main reasons for rising freight rates
In 2020, after the outbreak of Covid-19, ports at home and abroad began to implement strict testing and control measures to prevent imported cases of the epidemic. As a result, cargo ships arriving at ports had to queue to enter, causing severe port congestion, low vessel turnover rates, and tight capacity and space on container ships; in addition, the resumption rate of foreign terminals was not high, loading and unloading times increased, and port handling efficiency declined. According to Seaexplorer data, as of August 17, 2021, because many ports on all continents were facing operational disruptions, more than 346 vessels of major international shipping companies were berthed outside ports.
Overall, the decline in China's container output in the past two years may be one of the reasons for the surge in shipping prices. But the main reason is that pandemic control measures led to vessel congestion at ports and a sharp drop in container turnover rates. According to the China Container Industry Association, the global pandemic has caused serious retention of empty containers overseas, reducing container turnover efficiency. At present, only one container can return for every three exported, and large numbers of empty containers are backlogged in the United States, Europe, Oceania and other places, affecting container turnover efficiency. From the demand side, factors such as the recovery of global trade and inflation brought about by US monetary easing have pushed up shipping prices, and these factors have jointly driven up container freight rates.
