The increase in container freight rates may last until the end of 2024
?In the context of a sudden increase in demand and logistics bottlenecks that cannot be resolved soon, container shipping rates are forecast to increase until the end of this year.
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Container shipping rates increase as tensions escalate
?The conflict in the Red Sea region and the peak shipping season are pushing container shipping rates higher and higher. As of June 27, shipping rates from Asia to important routes such as the port of Rotterdam (Netherlands), New York, and Los Angeles have all increased more than twice compared to the beginning of the year. Compared to the record high during COVID-19, the current price is equivalent to about 50%.
?Talking to us, Mr. Nguyen Hoang Giang, Head of Stock Analysis Department, in charge of the Transport industry group under the Center for Analysis and Investment Consulting of SSI Securities, said that this year's context is very different from the previous year. last year. If last year importers pushed to reduce inventories due to economic weakness, this year, on the contrary, they pushed to increase inventories due to geopolitical tensions.
?US - China, EU - China trade tensions are escalating and importers cannot predict how far this conflict will escalate and which products will be subject to tariffs next. Therefore, it is said that the parties are accelerating the import of goods to serve the end of the year, avoiding the risk of being taxed due to retaliation. This also explains why this year's peak season comes earlier than usual.
?In previous years, the peak season usually started in June, but this year it started in May. The annual shipping peak season also comes earlier than expected, exacerbating congestion at the port.
?Reuters cited information from Dimerco, a freight forwarding company focused on Asia, saying freight rates were stable in April but in May "there was a significant increase in the country's seaborne exports". China's e-commerce, electric vehicles and renewable energy-related goods.
?According to data from Descartes, container import volume at US seaports in May increased nearly 12%, mainly due to imports from China reaching the highest level since January 2023.
?Congestion is starting to spread to Asia. The Maritime and Port Authority of Singapore (MPA) said in late May that the average waiting time for a container ship to dock is 2-3 days, compared to less than a day normally.
?Meanwhile, according to data from Linerlytica and real-time shipping data provider PortCast, waiting times can be up to a week.
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There are many long-term risk factors
?It will take some time for freight rates to decrease as shipping companies are still adding more ships. After earning huge profits from record high freight rates, shipping lines continuously invested in building new ships after the epidemic.
?According to data from shipping consulting and services company Clarksons, as of June 24, new transport capacity increased by about 5% by the end of 2023 to 29.2 million TEU.
?According to Alphaliner, the 2024 ship delivery book is estimated to account for 11% of the current fleet capacity. At the same time, for leased ships - which account for about 50% of the global fleet - many ships will be returned to the shipowner when the charter period ends.
?SSI (SSI Securities Corporaton) experts believe that the current rate of ship addition is still quite slow, just enough to fill the gap left by ships passing through the Cape of Good Hope, equivalent to about 8-9% of total shipping capacity. While the congestion suddenly increased. Even if you add in surcharges, the prices of some shipping routes to the US are already at the same price as during COVID-19. The price level is tending to "raise the foundation".
?"I think it will take until the fourth quarter for shipping lines to add capacity to handle congestion," Mr. Giang said.
?He further analyzed that once the supply chain is broken, it will need "free time" to reorganize. During this time, shipping lines will assess how high demand is. The more demand increases, the more serious the disruption becomes.
?At the present time, world demand is recovering but remains weak. If demand in the near future is not strong enough, by the end of the year there will be enough supply of ships, containers, etc. to handle the current congestion situation.
?However, Mr. Giang said that in the long term there are many variables that pose risks to the global supply chain. Typical US presidential election. If Mr. Trump is elected, the US-China trade war could become more tense. At that time, US imports can find alternative sources of supply to China, forcing the logistics chain that has been established for dozens of years to change.
?“In fact, these risks have rekindled since 2018 - 2019 when US-China trade tensions began. By 2021 - 2022, the Russia-Ukraine conflict will escalate. By 2023, there will be tensions in the Gulf region. The impacts of these conflicts are pervasive and growing. Therefore, transport-related activities are affected and freight rates will increase high. In the long term, the geopolitical situation in the world is still unstable, causing the logistics system may change different from those in compared to before," he said.
?At the recent General Meeting of Shareholders, Mr. Nguyen Manh Ha - Director in charge of marketing of Gemadept (Code: GMD) said that sea freight rates after the hot increase in 2020-2022 have decreased sharply, but since the end 2023 has gradually improved again. Gemadept leaders said that compared to the same period in 2023, fares on general transport routes are increasing by 300%, which is 3 times higher. Particularly, June fares continued to increase by 34% compared to May.
?"We believe that freight rates on all routes will continue to increase at least until the end of 2024, beyond that it is too early to predict," Mr. Ha said, citing Red Sea tensions, conflicts, and shortages. ships, lack of equipment will be difficult to overcome in a short time. (VietnamBiz, June 28, H.Mi according to “Doanh Nghiep & Kinh Doanh” news)
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