Dec 02,2021  Steel Knowledge.

"Skyrocketing ocean freight" has become a hot search word in major media all the way. In the past year and a half, ocean freight has been rising steadily. CCTV news has also been posted, and related policies have been introduced. Why hasn't it improved? This problem has been plagued by shippers and freight forwarders. Entering 2022, will this phenomenon be alleviated? Will shipping prices remain high? What caused the skyrocketing ocean shipping?

Demand side: a large number of foreign trade orders are transferred to China. According to data from the General Administration of Customs, in the first 10 months of this year, China’s exports were 17.49 trillion yuan, a year-on-year increase of 22.5% and a year-on-year increase of 25%. Supply side: More than 96% of the world’s dry freight containers and 100% of temperature-controlled containers are produced in China. At present, manufacturing companies are increasing their productivity, but the number of companies engaged in container production is still small, which disrupts container production. Rhythm.

The port is congested and the shipping capacity is tight, making it difficult to find a cabin. "One box is difficult to find" is still continuing. The main one is the lack of empty containers. "my country’s international shipping routes export heavy containers far larger than imported heavy containers. To maintain the balance of containers, it is necessary to transfer 3 million TEUs of empty containers by sea every month. At the same time, domestic container manufacturing is used to achieve container balance. Starting from the second half of last year, the demand for shipping has grown rapidly, reaching a growth rate of 14% in the fourth quarter of last year. However, due to the poor circulation of containers overseas and the slowdown of empty containers in shipping, the shortage of empty containers has resulted. At its worst, the gap in the amount of empty containers imported by sea reached 2 million TEUs, and there was a ‘difficult to find one’. On the other hand, there is a lack of container space. "The resulting increase in freight demand imbalance, port congestion and other issues have reduced the efficiency of ship operations, and the tightness of ship capacity has become prominent, especially in the spot market, which has led to a sharp increase in container liner freight rates. The global impact is still continuing, and the situation of port congestion and low ship turnover efficiency is difficult to reverse for a while, and a large number of new ships cannot be put into use at present, resulting in the continued increase of shipping prices."

Will shipping costs drop in 2022?

In the past third quarter, the dry bulk market demand continued to be strong. Due to the new crown epidemic prevention and control measures, weather and other factors, the ship was tight, and freight rates soared again. Due to the continued stability of coal transportation in the Pacific region and the substantial increase in infrastructure investment by governments of various countries, the volume of steel shipments has risen accordingly, causing the freight rate of the bulk cargo market to be pushed up again.

It has been said before that: after the Spring Festival in 2022, the pressure on shipping will be relieved and prices will be loosened. Maritime strategists said: Maritime prices will only fluctuate horizontally, and there is no possibility of a "significant drop."

From a macroeconomic perspective, it is inevitable that prices will not drop. There will be no obvious changes in the construction of infrastructure in the short term. Increasing port construction and improving port technology will not only take several years, but also more manpower and financial resources, which means that it is difficult to improve transportation efficiency within a certain period of time. In terms of benefits, a few are happy and a few are sad. What foreign trade importers and exporters eagerly hope is that the sea freight will be reduced, but the minds of sea freight players are unknowable.

"Decrease OR not drop" price is not a simple multiple-choice question. When we focus on the entire market, it is not difficult to find that in addition to the epidemic, there are many other factors that are interrelated and interact with each other. The price is high.

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