15 times in a row! $100 billion profit! shipping industry will welcome a super peak season in this year
(GJZ)-----This year, the shipping market is facing a variety of problems caused by cargo backlogs, ship delays, port jumps and shipping space shortages. With demand soaring and market participants making long-term preparations to ease the current congestion, every container ship that can sail is now in demand.
Due to the capacity shortage, there was another batch of new ship orders last week, include Seaspan, HMM and Wan Hai have all increased their shipbuilding orders.
None of this, however, will help solve the looming crisis in the container transport supply chain. Congestion at ports and inland areas is leading to shortages of available equipment and continues to affect the development of the beleaguered container supply chain.
On July 15, August 1, there will be two rounds of rate hikes,GRI has risen 15 times this year
Asia-US route raises GRI for 14th time in 2021 effective July 15, 2021
Asia-US route raises GRI for 15th time in 2021, effective August 1, 2021
According to the latest freight rate data of Shanghai Export Container Freight Index (SCFI) released on July 2, the SCFI composite index continued to rise to 3095.14 points last week, up 119 points or 3.2% from the previous period.
Quotations on all major routes are up:
.The rate for the eastern route jumped $310 to $9254 /FEU, an increase of 3.46%,
.US west freight also surged $228, or 4.8%, to $4944 /FEU,
.European freight rose $307, or 4.7%, to $6,786 /TEU,
.Mediterranean rates continued to rise to $6,655 /TEU, up 2.1%,
These are all record levels!
If international shipping prices remain at their current high levels through 2021, this would lead to an increase of about 2 percentage points in the price of imports, according to OECD estimates.
The third quarter will usher in a super season, freight rates will rise sharply!
Industry insiders pointed out that since this year, the lack of ships, boxes, workers, port congestion and other problems layer by layer, with the opening of Europe and the United States markets in June, the third quarter of the market into the traditional peak season, the demand far exceeds the capacity supply, driving freight prices skyrocketing.
It is expected that this week the SCFI freight rate index is expected to break through 4000 points, driving freight rates to explore a new sky-high.
With the global major shipping companies increasing freight rates in July and August one after another, if additional charges such as peak season surcharge, fuel fee and cabin purchase fee are included, the freight rate for the Far East to the US East line can reach $15,000-18,000 /FEU, the US West line has also exceeded $10,000 /FEU, and the freight rate for the European line is about $15,000-20,000 /FEU.
Analysts say congestion at European ports has worsened since the Suez Canal ran aground at the end of March, exacerbated by the closure of Yantian ports and nearby ports due to the outbreak.
Although Yantian Port is now back to normal operation, it is still unable to be completely digested in the short term, and the congestion situation of American ports has not been improved so far. The third quarter of this year is expected to usher in a super peak season for the transportation companies.
Strong demand for restocking will continue to drive up freight rates as retailers' inventories remain at near 20-year lows, the National Retail Association forecast.
Container shipping will make as much as $100 billion this year!
Mr Drury said spot and contract rates hit record highs in the second quarter as worsening supply chain disruptions continued to push prices higher. Container shipping lines are expected to make annual profits of $80 billion in 2021, and even $100 billion if rates continue to rise rapidly in the second half of the year.
"2021 will be the first year in the history of container shipping, with carriers earning close to $100bn and average rates rising by 50 per cent against the backdrop of significant operational disruptions to ports and ship systems," the UK consultancy noted.
Mr Drury forecast that container volumes would continue to grow through the peak third quarter to the end of the year and finish the year at an annual rate of about 10 per cent, cementing a record year for the industry.
For 2022, Drury says there will still be growth, but with the removal of epidemic-related restrictions, consumer spending is expected to shift to services, and growth is likely to be about half that.
For 2022, Mr Drury expects EBIT to fall by more than a third, due to softer freight rates and higher costs, which are likely to stay higher for longer as many carriers lock in expensive long-term contracts.
Lars Jensen, chief executive of Vespucci Maritime, a container consultancy, has studied Mr Drury's $100bn profit figure and reckons container shipping will make up for 20 years of losses in a year.