Shipping Issues Continues To Affect Global Trade In The Post-Pandemic Era
- UNCTAD: Review of Maritime Transport 2021
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Although the impact of covid-19 on maritime trade last year was not as severe as expected, the knock-on effects will be far-reaching and could transform the industry. maritime trade contracted by 3.8% in 2020, but has since rebounded and is estimated to grow by 4.3% this year. Facing increasing risks and uncertainties, such as unprecedented pressure on global supply chains, a sharp spike in freight rates and price increases that are impacting both consumers and importers.
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Supply: Port Congestion Is Difficult To Relieve, And Labor Shortage Is Serious
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Demand: Global Trade Volume Growth Rate Of 6.7% In 2022
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Global port congestion remains serious, and in-port container ship capacity is still at a high level. As of October 2021, the global average 7-day container ship capacity in port reached 8.45 million TEU, up 7.9% year-on-year, accounting for 34.6% of the global capacity scale, up 1.2 pct year-on-year and up 3.5 pct year-on-year in 2019, reflecting a significant decline in global port operating efficiency.MORE
![7-day average number of container ships waiting at anchor at the Port of Los Angeles]()
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On October 12, the International Monetary Fund (IMF) maintained its forecast for global economic growth of 4.9 percent in 2022, while stating that a multi-point outbreak of the epidemic had affected countries and regions at key points in the global supply chain, causing longer than previously expected supply chain disruptions.MORE
![Demand Global Trade Volume Growth Rate Of 6.7% In 2022 With Strong Customer Shipment Demand]()
Container supply-demand imbalance may continue until 2023
3 Main Capacities Of Sea Freight
Dry Bulk Carriers
At the beginning of 2020, dry bulk carrier capacity is the strongest, with a capacity of 879.33 million dwt.
Oil Tankers
Oil tankers ranked second, with capacity reaching 601.163 million dwt.
Container Ships
Container ship capacity was 274.856 million dwt.
TOP 3
Oil tankers and dry bulk carriers are the main types of transport vessels in maritime transport, and are growing at a faster rate.
Steady Growth Of Container Ship Capacity May Be Expected
Clarksons Research statistics show that global container ship capacity rises year by year from 2017 to 2020, reaching 23,642,000 TEU in 2020, up 2.9% from 2019. This is mainly because of the economies of scale of large container ships, which can effectively achieve rapid transportation of cargo from the port of origin to the port of destination. Container ship large-scale requirements for port hardware facilities continue with the development and growth of shipping companies large process, mainly in the port water depth, infrastructure, operational efficiency and other aspects.
![2017 Is The Starting Year For Rebuilding Order In The Maritime Industry]()
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2017 Is The Starting Year For Rebuilding Order In The Maritime Industry
The low ocean freight prices of the past decade are essentially the result of the ongoing price war started by the large shipping companies, represented by Maersk.Public health events, among others, led to a significant drop in demand, but no further losses were incurred in 2017 following the widespread restructuring and consolidation.
The Competition Pattern Is Greatly Optimized, And The Main Routes Are Cleared
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The low ocean freight prices in the past decade were essentially brought about by the continuous price war started by the large shipping companies represented by Maersk, and the trunk lines have been the first to clear the industry, and the shipping companies operating under the three alliances will pursue reasonable returns. Tracing the 20-year history of container shipping development, we find that 2013 was a key year affecting the whole cycle of container shipping, during which 2.16 million TEU of capacity was signed, accounting for 13% of capacity at that time, which deviated from the previous cycle rule.ENTER
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![Growth rate of trade imports of developed economies, 2001-2021]()
Long-term shipping prices will return to rationality, bringing reasonable rates of return
From a long-term and international perspective, we estimate that the final proportion of logistics price anchors, i.e. logistics costs, may be in the range of 6%-9%.In terms of industrial production, a logistics cost ratio of 6%-9% of the value of goods is relatively reasonable. According to the 2016 China Federation of Logistics and Purchasing survey, the logistics cost rate of industrial, wholesale and retail enterprises in China was 7.4% in 2016, and the logistics cost rate of industrial enterprises was about 1% higher than that of wholesale and retail enterprises. In Japan, the logistics cost rate of industrial enterprises such as ceramics, earth and stone, glass and cement was the highest in 2013, reaching 8.69%, followed by the food industry, which requires transportation via cold chain, with a proportion of 8.57%, and the food industry, which can be transported at room temperature, with a proportion of 6.01%. As the proportion of lower-cost transportation methods such as waterways and railroads gradually increases, the logistics cost rate of Chinese enterprises will continue to decline, and the current logistics cost rate of China's manufacturing industry may already be maintained at 6%-9%, as in Japan.
China to U.S. actual freight value ratio 6.64% for the first nine months of 2021
Assuming that all containers are transported at spot ocean freight rates, the spot ocean freight rate ratio of China's exports to the U.S. in the first nine months of 2021 is 11.29%. The spot ocean freight rate ratio of China's exports to the U.S. in 2020 is 5.42%, we believe that the freight rate ratio is within a reasonable range. From the perspective of industrial production, a logistics cost ratio of 6% to 9% of the value of goods is relatively reasonable. According to a survey conducted by the China Federation of Logistics and Purchasing in 2016, the logistics cost rate of industrial, wholesale and retail enterprises in China was 7.4% in 2016, and the logistics cost rate of industrial enterprises was about 1% higher compared to that of wholesale and retail enterprises. As the proportion of lower-cost transportation modes such as waterways and railroads gradually increases, the logistics cost rate of Chinese enterprises will continue to decline.
End-to-end and digitalization will reshape industry valuations
Strategic Transformation Of Shipping Companies
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In June 2016 Maersk launched a strategic transformation to become a company focused on providing end-to-end container logistics services. 2017 saw Maersk lead a shift in the industry's competitive strategy, from market share to redefining the value of the industry's services by shipping containers like parcels. Maersk intends to become a global container logistics integrator, connecting and simplifying its customers' supply chains. Leading companies such as Duffy, COSCO, Hapag-Lloyd and others are also setting up end-to-end businesses.
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![Strategic Transformation Of Shipping Companies]()
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End-To-End Services Of Shipping Companies
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Outbreak Extends Supply Chain Repair Time, But Has Limited Impact
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At present, companies providing end-to-end services mainly fall into two types: one is an asset-light logistics service provider (mainly freight forwarding companies) transformed by traditional freight forwarding companies, and the other is a capacity service provider (mainly shipping companies) gradually shifting to end-to-end business.MORE
![End-To-End Services Of Shipping Companies]()
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Omicron variant virus may again extend global supply chain repair time. According to data released by the National Institute of Communicable Diseases in South Africa, the Omicron variant is spreading faster and is more transmissible than the previous variant. We expect the supply/demand imbalance in shipping to persist until the end of 2022, which may be prolonged by recurring outbreaks.MORE
![Outbreak Extends Supply Chain Repair Time, But Has Limited Impact]()
The current boom of container shipping market brings abundant cash flow to shipping companies, and shipping companies are bound to consider the future development transformation direction of enterprises, or will invest more funds for end-to-end business layout, and the cyclicality and volatility of container shipping industry is expected to be hedged by the extension and value-added of services.