Under the contraction of foreign trade, the phenomenon of empty containers piling up at ports continues.
In mid July, on the wharf of Yangshan Port in Shanghai, containers of different colors were stacked neatly into six or seven layers, and the empty containers piled up in sheets became the scenery along the way. A truck driver is cutting vegetables and cooking behind an empty trailer, with long lines of trucks waiting for goods in front and behind. On the way down from the Donghai Bridge to the wharf, there are more empty trucks “visible to the naked eye” than trucks loaded with containers.
Li Xingqian, Director of the Department of Foreign Trade of the Ministry of Commerce, explained at a press conference on July 19th that the recent decline in China’s import and export growth rate is a direct reflection of the weak global economic recovery in the trade sector. Firstly, it is attributed to the continued weakness of overall external demand. Major developed countries still adopt tightening policies to cope with high inflation, with significant fluctuations in exchange rates in some emerging markets and insufficient foreign exchange reserves, which have significantly suppressed import demand. Secondly, the electronic information industry is also experiencing a cyclical downturn. In addition, the import and export base significantly increased during the same period last year, while import and export prices also decreased.
The slowdown in trade is a common challenge faced by various economies, and the difficulties are more global.
In fact, the phenomenon of empty container stacking does not only occur on Chinese docks.
According to the data of container xChange, the CAx (Container Availability Index) of 40 foot containers in Port of Shanghai has remained around 0.64 since this year, and the CAx of Los Angeles, Singapore, Hamburg and other ports is 0.7 or even more than 0.8. When the value of CAx is greater than 0.5, it indicates an excess of containers, and long-term excess will result in accumulation.
In addition to the shrinking global market demand, the surge in container supply is the fundamental reason for exacerbating oversupply. According to Drewry, a shipping consulting company, more than 7 million containers were produced globally in 2021, three times higher than in regular years.
Nowadays, container ships that placed orders during the epidemic continue to flow into the market, further increasing their capacity.
According to Alphaliner, a French shipping consulting company, the container shipping industry is experiencing a wave of new ship deliveries. In June of this year, the global container capacity delivered was close to 300000 TEUs (standard containers), setting a record for a single month, with a total of 29 ships delivered, almost an average of one per day. Since March this year, the delivery capacity and weight of new container ships have been continuously increasing. Alphaliner analysts believe that the delivery volume of container ships will remain high this year and next year.
According to the data of Clarkson, a British shipbuilding and shipping industry analyst, 147 975000 TEUs of container ships will be delivered in the first half of 2023, up 129% year on year. Since the beginning of this year, there has been a significant acceleration in the delivery of new ships, with a year-on-year increase of 69% in the second quarter, setting a new record, surpassing the previous delivery record set in the second quarter of 2011. Clarkson predicted that the global container ship delivery volume will reach 2 million TEU this year, which will also set an annual delivery record.
The editor in chief of the professional shipping information consulting platform Xinde Maritime Network stated that the peak delivery period for new ships has just begun and may continue until 2025.
In the peak consolidation market of 2021 and 2022, it experienced a “shining moment” where both freight rates and profits reached historic highs. After the madness, everything has returned to rationality. According to data compiled by Container xChange, the average container price has dropped to its lowest level in the past three years, and as of June this year, container demand remains sluggish.
Post time: Jul-25-2023