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European line freight rates have dropped to 750-850 US dollars/FEU! Losses intensify, shipping companies are facing hard times

Ting https://mp.weixin.qq.com/s/tkh3_SIYrgX9gLAhw9ixkg 2023-09-28 09:52:38

The traditional peak season of the container shipping market has not yet ended, and freight rates have fallen for three consecutive weeks. Last week, European lines reported that the freight rate per large container in the Chinese market has dropped from US$900 to US$750-850, which is 150 US dollars lower than the cost price of about US$1,000. -250 US dollars, and the return cargo was even worse, falling from 400-450 US dollars per large box to 20-100 US dollars. In the third quarter, marine fuel increased by 21% quarterly as of the 22nd. In the fourth quarter, the four major international energy and financial institutions all It is estimated that oil prices will continue to rise, and the situation is quite pessimistic.

Industry insiders pointed out that the world's ultra-large container ships are deployed on the European line. These ships are very young, have high construction costs, and high fixed costs for idleness. It is difficult for shipping companies to idle a large number of ships, so they are not like the ships on the American line. The idle ratio is high and freight rates are much more stable.

The current low freight rates on the European line are mainly compensated by charging container yard handling charges (THC) at loading and unloading ports. This charge is about 150-200 euros per large box in European ports, and about NT$8,000 in Taiwan. Because of antitrust measures, each company charges different fees, but the difference is not big.

At this stage, the European line has been determined to be operating at a loss, while the freight rate of the American line is still above the profit level. However, assessments by very large shipping companies show that the freight rate per large box in the US-Western United States is likely to fall below US$1,200 in the fourth quarter, and with the current cost price in the range of US$1,300-1,500, any shipping company will face losses. , the current shipping price per large box is approximately US$1,700.

According to people who have been tracking container shipping stocks for a long time, the carrier's performance in the peak season of the third quarter (as of September 22) was affected to a certain extent due to the impact of shipping companies' drastic reduction in work schedules to control supply and the drought and weight loss in the Panama Canal. The Shanghai Shipping Exchange Container Freight Index (SCFI) increased by 1.6% quarterly, while Singapore bunker fuel prices increased by an average of 21.3% in the third quarter. Therefore, it is reasonable to speculate that the profits of container shipping companies in the peak season of the third quarter will be significantly lower than the off-season levels in the second quarter.

The person pointed out that from the perspective of seasonal practices, the peak season for container shipping falls from July to October, especially July and August. September is still in the peak season, but the latest SCFI report on September 22 The index reached 912 points, which is significantly lower than the 981 in the second quarter and 997 in the third quarter (as of September 22); at the same time, the latest single-day Singapore marine fuel price of 923 US dollars on September 22 was significantly higher than that in the second quarter. of US$702 and the average price of US$851 in the third quarter; in the off-season of the fourth quarter, the SCFI container freight index will continue to fall due to the off-season, but marine fuel oil may continue to rise (due to production cuts by oil-producing countries). Shipping companies Profitability will be worse in the fourth quarter.

Recent relevant data also shows that four of the five major international energy and financial institutions, including the U.S. Energy Information Administration, Standard Chartered Bank, Goldman Sachs Group, JPMorgan Chase, etc., all estimate that oil prices will rise by another 4-8% in the fourth quarter.

White sailings already account for 16% of mainline capacity, according to Drewry, but have not yet stemmed falling freight rates, driven by new ultra-large ships, Container Xchange warned in a recent report , the continued expansion of shipping capacity exceeds existing demand, resulting in considerable pressure on already oversupplied trade routes.

According to Alphaliner statistics, this year the supply of container shipping capacity will increase by 8.2%, while demand will only increase by 1.4%. Next year, supply will increase by 9.0%, while demand will grow by 2.2%. There is a clear imbalance between supply and demand.