The Unblocking Of Shanghai Will See A Retaliatory Shipment Trend! Freight Rates May Rebound

The unblocking of Shanghai will see a retaliatory shipment trend! Freight rates may rebound

This year's aviation trade market is somewhat "different": the "increasing" sea freight rates are falling, and the hard-to-find space has also been loosened in the near future. According to data released by a number of shipping consulting agencies, the spot freight rates on some routes from Asia to Europe and the United States have recently declined, and the demand for maritime container transportation has also declined.

The Shanghai Stock Exchange released the latest one-week export container freight index SCFI on the 13th, falling for 17 consecutive weeks, down 0.38% to 4147.83 points, only the freight rate of the US-Western route rebounded slightly by 0.15%, and the freight rate of the other major routes continued to be sluggish; accumulative SCFI so far this year The decline was 18.82%, mainly dragged down by the 24.65% drop in the European route. As for the US east route, which fell by 10.76%, and the US west route, which fell by 1.18%, the decline was limited in a consolidation pattern.

According to the latest freight rate index of SCFI:

The freight rate of the Far East to West America route was US$7,900/FEU, an increase of US$12 and a weekly increase of 0.15%;

The freight rate of the Far East to US East route was US$10,560/FEU, down US$28, or 0.26% for the week.

The freight rate of the Far East to Europe route was US$5,860/TEU, down US$95 or 1.59%;

The freight rate of the Far East-Mediterranean route was US$6,601/TEU, down US$90 or 1.34%;

The freight rate of the Far East to Southeast Asia line (Singapore route) was US$992/TEU, down US$4 and 0.4% for the week.

A number of airlines and freight forwarding practitioners said that due to the conflict between Russia and Ukraine and the epidemic control, the limited transportation of raw materials, semi-finished products, and finished products is the key to the continued decline in market freight rates.

With the gradual lifting of the epidemic in Shanghai and the steady resumption of work and production, the volume of goods will gradually pick up in the short term. The industry estimates that the volume of goods in April will be 20% lower than that in March, and will remain stable in May. With the accelerated resumption of work and production and policy support , the manufacturing industry will see a wave of retaliatory shipments, and the shipping industry is expected to usher in relatively strong market demand. At that time, the pressure on the supply chain will increase again, supporting the rise in freight rates. The industry expects to see a boost in volume at the end of May and early June at the earliest.

The cumulative decrease in the basic freight rate of major routes since the beginning of this year:

European routes fell the most by 24.65%, and the freight rate dropped from US$7,777/TEU to US$5,860/TEU, down by US$1,917;

The US-East route fell by 10.76%, and the freight rate dropped from $11,833/FEU to $10,560/FEU, down $1,273;

The US West Line fell only 1.18%, and the freight rate dropped from US$7,994/FEU to US$7,900/FEU, a decrease of less than US$100.

With the launch of Shanghai's unblocking policy, there will be a wave of cargo rush, which will also be a turning point in the freight rate of the spot market. At present, it seems that the second quarter will not be a weak season, and then enter the traditional shipping season in the third quarter. , freight rates have the opportunity to ascribe. According to industry interpretation, the US demand is still strong, and the freight rate of the US-Western route has remained stable since May and then rebounded slightly. It also reflects that some airlines have launched new long-term contracts, driving the spot price to strengthen. Once the resumption of work and shipments is accelerated, the transportation demand is expected to increase rapidly. Lift.

However, the two major international shipping giants are not optimistic about freight rates in the second half of the year...

Maersk, Hapag-Lloyd: Freight rates may drop significantly in the second half of the year

The world's two major shipping giants are not optimistic about the freight rates in the second half of the year. Recently, Hapag-Lloyd hinted that the spot (spot) freight rates in the second half of the year may drop significantly; earlier, Maersk held a corporate conference call after the first quarter earnings announcement. , also revealed that the spot freight rate in the second half of the year is not optimistic.

It should be noted that, recently, the spot freight rate of some routes has dropped below the contract price. Taking the Far East to the West America as an example, the contract prices signed by major airlines with large customers or freight forwarders in the past year are mostly above US$8,000/FEU, but in recent weeks, the spot freight rate from the Far East to the West America has dropped to this level. below the price.

However, Maersk pointed out in the conference call that the company's contract price accounted for a relatively high proportion, and there are only some contracts left to be signed; Maersk CEO Shi Suoren said that the current development trend in the second quarter is very similar to that in the first quarter. But "we think demand will slow down in the second half of the year and return to normalization ... we see increasing risks in the economy. There are quite a few factors that suggest we will see slower growth in the second half of this year and next year."

Therefore, some people believe that the high proportion of long-term contract prices and the strong ability to execute contracts will protect Maersk's profits in the next two to three years, and large airlines in similar situations will operate relatively positively. Further, for airlines with a low long-term contract ratio, the operation in the next few years may be unfavorable. It is reported that Hapag-Lloyd, which is not optimistic about the operation in the second half of the year, has a relatively low proportion of its contract price. Some people pointed out that in the next few years, the profit performance of large airlines may be due to the rise and fall of the long-term price ratio, and there will be two situations.

In this regard, Maersk pointed out that the company's long-term ratio is more than 70%, and it is expected that the profit in 2022 will increase by 25% compared with 2021. This year will be the most profitable year in history. It should be noted that although both Maersk and Hapag-Lloyd are not optimistic about the trend of spot freight rates, after the first quarter earnings report was released, they each raised their expectations for profit this year. The giants' view that their respective companies will make better profits this year than last has not changed.

Industry insiders pointed out that the key to the continuous decline in spot freight rates lies in the impact of the Russian-Ukrainian conflict and the epidemic. Recently, with the unblocking and continued resumption of work and production, some analysts are optimistic that there will be a wave of retaliatory shipments, but Hebrood takes this conservatively. Hapag-Lloyd CEO Rolf Habben Jansen revealed in a related briefing after the disclosure of the first-quarter earnings report that the company's profit has peaked this quarter. Chief Financial Officer Mark Frese summed up the company's profit forecast for this year and said that the second quarter is still better than expected, but it may be slightly lower than the first quarter, and the profit in the second half of the year may be halved compared with the first half.

May be expected to rebound in the short term

In the first few months of the 2020 Covid-19 outbreak, major global container shipping lines were shut down on a massive scale. And when U.S. demand rebounded sharply last year, the continued tightness in capacity caused freight rates to soar until the beginning of the year. Spot rates have been well below their highs since the start of the year. Over the past 10 weeks, ocean freight rates have fallen 20% from their peak levels, Lee Klaskow, a senior logistics analyst at Bloomberg Intelligence, said in a research note last week. "The virus has put pressure on demand, which has alleviated some bottlenecks in the supply chain. Once the epidemic restrictions are eased, freight volumes may surge, which may boost demand for liner capacity and lead to higher freight rates."