ld economy is picking up, but its speed and strength are not as good as expected, making the market as a whole cautious.
Summary
The various uncertainties brought about by the new crown pneumonia epidemic, the trade war and oil price fluctuations are factors that everyone is still paying attention to.
Although there has been an increase in new orders for ships, especially in the field of container ships and tankers, the overall global order volume is declining, and the order volume is likely to bottom out by the end of 2021.
With the increase in newbuilding orders, the utilization rate of shipyards has risen sharply. Supporting this phenomenon is the liberalized financial support of central governments around the world to ensure the operation of economic activities and the demand for shipping after the epidemic.
Dry bulk carrier
The rental of Cape dry bulk carriers climbed to a quarterly peak of nearly USD 34,000/day in October 2020, and then fell to a low level of around USD 10,000/day in mid-December.
Due to the uncertainty of regulatory policies, the newbuilding activities of dry bulk carriers have slowed down significantly in the past few years. We expect that the number of new ship orders will not rebound until early 2022.
The current newbuilding order to fleet ratio is close to 6%, which is the lowest level since the beginning of 2002.
The gradual phase-out of retrofitted VLOCs has affected the recent ship recycling market, but as the market shrinks, the ship recycling business is expected to decline.
It is expected that the IMO greenhouse gas emission reduction target that will take effect in 2023 may have a significant impact on capacity supply.
We infer that the rent of the Cape of Good Hope will increase. By 2023, the average rent for Capesize bulk carriers will reach US$30,000/day.
Tanker
Oil-producing countries still face the challenge of low oil prices, especially the impact of low demand caused by the COVID-19 pandemic.
Transportation and industrial demand in Eastern countries are approaching their pre-epidemic levels, while Western countries are being affected by the escalation of anti-epidemic measures, which may continue into the new year.
Oil tanker earnings have been sluggish in the second half of 2020. We expect rents to increase in 2021 , but rents in the first half of the year may still face some challenges; in 2022 and 2023, tanker rents will continue to strengthen.
It is expected that the IMO greenhouse gas emission reduction target that will take effect in 2023 may have a significant impact on capacity supply.
Our calculation of ton nautical miles shows that in 2020, the tanker market has declined. However, strong growth should resume in 2021 and 2022 . The rebound in this market is the result of the return of logistics to normal after the new crown pneumonia epidemic and the consequent increase in demand for transportation fuel.
The return of growth in industrial activity and consumer demand is the cornerstone of active economic development. Oil inventories at sea and on land have fallen from high levels, and the threat to import demand has also decreased accordingly.
Container Ship
The freight rate of container ships is currently at the highest level since 2015.
It is expected that in 2021 the European Union’s 750 billion euro recovery fund will boost the economy, and the implementation of vaccines will be another layer of guarantee to support the European economic recovery.
In 2021, the container shipping market will usher in a recovery. The demand for container nautical miles is expected to increase by about 6.5%, and it is expected to increase by 4% in 2022.
The recent increase in new ship orders will bring the delivery of ultra-large container ships (ULCV) to nearly 600,000 TEUs in 2023.
In 2020, the total amount of container ship dismantling will account for about 0.5% of the fleet, but as revenue increases, it is expected that ship dismantling activities will decrease in 2021-2022. We expect that in 2023, as the new IMO greenhouse gas emission reduction regulations come into effect, the amount of ship dismantlement will increase slightly.
After the economic crisis in 2008, many old container ships were optimized to adapt to low-speed navigation. These ships have already met the requirements of IMO.
It is expected that the supply of container ship capacity will increase in the next two years, but the capacity growth will be lower than in 2020.
The revenue of container ships is expected to weaken in 2021 and will resume rapid growth in 2022-2023.
Liquefied petroleum gas ship
Rising crude oil prices once again make LPG a more attractive petrochemical feedstock supply. Driven by approximately 10.5% growth in U.S. exports (mainly to Asia), very large liquefied petroleum gas carriers (VLGC) will have a huge profit in the fourth quarter of 2020, reaching up to 2.5 million US dollars. The increased delays in the navigation of the Panama Canal have also provided support for revenue.
In addition, the increase in ammonia production in Algeria and Trinidad has also increased the demand for ammonia transportation by gas ships.
Due to increased industrial activity in Europe, butadiene exports from Europe are weak. The revenue of handy type ships is maintained at about 650,000 US dollars per month, while the revenue of 10,000 cubic meters of liquefied petroleum gas/ethylene ships (LPG/E) is about 425,000 US dollars per month.
The main engine that uses propane as fuel is becoming the "new favorite" for new-built ships of very large liquefied gas ships (VLGC) and medium-sized liquefied gas ships (MGC).
With the global recovery from the epidemic in 2021 and the increase in oil production in the Middle East, it is expected that more LPG exports will be exported. U.S. exports of liquefied petroleum gas in 2021 are expected to be the same as in 2020, and will rise again in 2022 and 2023.
In 2021, the volume growth of VLGC seems to be somewhat weak, but it is likely to increase with the steady increase in capacity.
In addition to liquefied petroleum gas, large liquid gas carriers (LGC) and MGC ships may provide more support for the expanding ammonia trade. Rising crude oil prices will stimulate the use of liquefied petroleum gas as a raw material for ethylene production in Europe and Asia.
As the United States continues to export ethylene (mainly to Asia), and the recovery of propylene trade (which may also come from the Atlantic market), the demand for petrochemical gas transportation is expected to remain high.
Shipbreaking activities are expected to slow down in the near future, and new ship construction activities are expected to pick up from 2022.
The shipping industry in 2020 can be said to be half winter and half summer.
Affected by the epidemic, China's exports declined in the first half of the year, and the shipping industry was cold and "overwintering" ahead of schedule. In the second half of the year, the neglected shipping industry directly entered the "midsummer." As the epidemic situation in China stabilizes and the economy recovers steadily, goods from all countries are transferred from Chinese ports. For a time, China's shipping industry is showing a busy scene.
“It’s too difficult to order containers now!” A reporter from the Securities Daily could see vehicles transporting containers coming and going at the Shanghai port. A foreign trade official who did not want to be named told the reporter: “At present, I want to order a container. The price can be said to be one price per day. Not only that, even if the container is booked, I still have to worry about the availability of the cabin."
"Shanghai SIPG, Ningbo, and Shenzhen are all major ports in the world. In 2018 and 2019, the container throughput of Shanghai Port was ranked first. Recently, the container shipping market is very hot, and many boxes cannot be returned after they go out." People from listed companies commented on the reporter of "Securities Daily".
In this regard, Liu Wang, chairman of Shanghai Tianhui International Logistics Co., Ltd., told reporters: “The price of container transportation has been rising. Because shipping companies have fewer ships, they often suspend voyages, and the lack of boxes is common, even if the price increases. It cannot fundamentally solve the problem of missing boxes."
• One price a day, "boxes" are crazy
"The most exaggerated time in the past 10 years." Speaking of the current shipping industry, Ms. Xie, who is engaged in the foreign trade industry, told a reporter from the Securities Daily. Ms. Xie is mainly responsible for the freight of Guangzhou Nansha Port and Shenzhen Port. She told reporters that taking a 40-foot container as an example, the highest sea freight to the Middle East at this time last year was about US$3,000. It costs almost US$5,000 now. Last year, it was US$2,800 to US$3,200 to Europe, and now it is US$6,000 to US$7,000. This year, the freight is almost twice the same period last year.
By the end of the year, the lack of positions became a true portrayal of the operation industry.
“Nowadays, there is a shortage of containers and high freight rates. The supply exceeds demand. During the epidemic, there was a large backlog of foreign containers that could not be arranged for delivery, and no one carried the goods. Almost all customers were looting containers. Under current market conditions, there are few freight forwarders. When looking for new customers, they are basically priority old customers.” Ms. Xie told reporters that the new year is approaching, and major suppliers are fully shipping. It is expected that the shortage of containers will continue.
"First of all you have to have a position, then you have to line up the truck to get the container, and finally you have to wait for the port to open before you can enter the port. Every day, you have to go through five hurdles, and you have to face customer soul torture. It's late, can't you figure it out?" A shipping forwarder complained about the tightness of the current export containers.
Liu Wang revealed to the "Securities Daily" reporter: "Many forwarders who have no boxes sometimes look for scalpers. Now forwarders are looting positions. The positions have to be booked in advance. Many people robbed and reselled them. In the past, they did not lose their shipping fees. Now that the shipping companies are recovering their losses, the shipping companies are about to usher in a wave of market conditions this year. After the merger and reorganization last year, it is estimated that all the money lost in the past will be made back this year."
Liu Wang said: “In the past Christmas and the Spring Festival, there will be a wave of liquidation market, this year is particularly fierce because of the epidemic. South American container boxes were the lowest in history at 50 US dollars a small container, and now basically it costs more than 5,000 US dollars, and a large box 10,000. U.S. dollars, if $5,000 this week is too expensive for you, you may not be able to order $6,000 next week, basically one price a week."
In fact, the current container price has been upgraded to a daily basis. A person in charge of an international logistics company said: “In Qingdao Port, the price of a second-hand 40-foot container in previous years was about US$2,000. On November 27 this year, the price rose to US$2,850; by November 30, the price of a second-hand container rose to US$3,200. ; On December 3, it rose to 3,400 US dollars again, almost one day."
According to data from the freight benchmark company Xeneta, the current average price of short-term market contracts in Asia and Europe for three months or less is 200% higher than a year ago, at $4,831 per 40 feet. But from the same period last year, freight rates across Southeast Asia have increased by an astonishing 390.5%.
The relevant person in charge of COSCO SHIPPING Holdings told reporters: “As the volume of goods continues to rise, the demand for export containers has greatly increased, and the domestic guarantee for container use has become tighter. However, the turnover of overseas empty containers has generally slowed due to the continuous impact of the epidemic situation in various places. Transfer back to China to meet demand."
"The whole industry is looking for boxes everywhere, and some merchants are beginning to hoard boxes to speculate on prices." In the eyes of industry insiders, the current situation of foreign trade companies being difficult to find a box is not only because of the slow operation of containers, but also because of the reduction of some routes. .
"There are few ship lines, and most of the cabinets shipped abroad can't return. This is the root cause of the skyrocketing price of the domestic container transportation market." Liu Wang explained to the reporter: "It's not that foreign cabinets are not coming back. It is the epidemic situation abroad. The impact is that the workers do not go to work and the speed of transportation is relatively slow. Now everyone is sharing the warehouse."
According to Liu Wang, the container ships now and the alliance has been formed since last year. Originally, it used its own ships to transport the goods. Now four or five shipowners or five or six companies form an alliance, and use the same ship. warehouse. "It turns out that there may be several shipping companies arranging several shifts to go to sea in a week. Once we formed an alliance, the shifts decreased in a week. This started last year. Now shipping companies often stop once a week, which objectively leads to a shortage of ships. ."
A person in charge of the Shanghai Maritime Logistics Company introduced to a reporter from the Securities Daily: "At present, the proportion of import and export trade by sea is imbalanced. There are few boxes coming in and many boxes going out . In addition, China has quickly prevented and controlled the epidemic, and overseas orders have continued to surge. , Increasing the pressure on shipping. Overseas, affected by the epidemic, the operation cycle of containers shipped out due to business environment problems has been lengthened, the arrival process has increased, and the operation efficiency has slowed and lengthened the circulation cycle. Due to the early outbreak of the epidemic, major shipping The company has reduced many routes, resulting in uneven distribution of global container volumes."
The industry believes that with the increase in market demand, the current effective capacity is obviously insufficient.
The relevant person in charge of COSCO Shipping Holdings revealed to the reporter: "As the global epidemic prevention and control has become normalized, global trade has been rapidly repaired since the third quarter of this year, and the demand in the container shipping market has recovered beyond expectations. In order to meet the growth of transportation demand, market capacity has gradually returned to normal. , The idle capacity has dropped rapidly from the record high of more than 2.7 million TEU (international standard unit units) in May this year. At present , there is no airworthy effective capacity to rent in the market. "
In the context of uneven global container deployment, container prices on different routes have also risen at different rates.
"Since November, the price of the U.S. line has increased by about four times compared with the beginning of the year, and the European line has risen to the highest price last year. From the perspective of the distribution of China’s export routes, the U.S. container accounts for 25%, Europe accounts for 25%, and Southeast Asia , Northeast Asia adds up to 50%, the US route is now hard to find a box is the norm, followed by the European route, freight is also very tight. The price of Malaysia route in Southeast Asia has also doubled recently." The person in charge of the aforementioned logistics company added.
Facing the increase in demand for containers, the above-mentioned relevant person in charge of COSCO SHIPPING Holdings stated: “The company will strengthen scientific forecasts for container use, actively coordinate dual-brand superior resources, and make every effort to guarantee the use of containers during peak seasons. On the one hand, internally tap the potential and accelerate overseas heavy container Demolition speed, increase empty container callback domestic and Far East efforts to promote container turnover; on the other hand, close communication with container manufacturers and container leasing companies to seek more container sources. Through two-pronged and multiple measures, to guarantee domestic container use Provide effective assistance and try our best to meet the shipping needs of customers."
In order to meet the development needs of the container market, SIPG has launched a number of effective measures to promote container volume growth in response to the market. At the beginning of this year, the Group launched seven special measures for container growth, through the implementation of preferential international transit loading and unloading fees, extension of the international transit container storage exemption period, and sea-rail intermodal customs clearance container preferential projects. In the first half of the year, the Group established three major container areas: Yangshan, Outer Harbor, and Domestic Trade, striving to achieve overall planning and agglomeration effects.
According to SIPG’s official announcement, in October, each terminal of Shanghai Port set a new record. The monthly throughput of Shengdong Company exceeded 820,000 TEUs for the first time. Among them, 33068 TEUs and 12899.75 TEUs were updated on October 25. Class record; Guandong Company broke through 720,000 TEU, setting a new record again.
• How long can the "shortage of containers" last? What is the future prospect of the shipping industry?
"The first half of the year was affected by the new crown epidemic. Ports and shipping fields did suffer a relatively large negative impact, so the first half of the year was basically a negative growth state. In the second half of the year, especially after the third quarter, normal operations resumed to a certain extent, plus China The epidemic has been controlled to a certain extent, and most of the economic activities have been resumed first. Therefore, compared with the first half of the year, there is indeed a big sign of a bottoming out." said Liu Dian, a research assistant at the Chongyang Institute of Finance of Renmin University of China.
In the first two months of this year, my country's foreign trade imports and exports dropped significantly. According to China Customs data, from January to February 2020, my country's total import and export value of goods trade was 4.12 trillion yuan, a year-on-year decrease of 9.6%. Among them, exports were 2.04 trillion yuan, down 15.9%; imports were 2.08 trillion yuan, down 2.4%.
Although the current domestic epidemic situation is under control, the global epidemic is breaking out, and exports are still under certain impact.
It can be said that in the first half of this year, people in the shipping industry were mainly pessimistic about my country's export prospects. In the second half of the year, the industry was generally optimistic about the future development of the shipping industry.
Insiders analyzed to the "Securities Daily" reporter that this round of container freight price increases began in the middle of this year. At that time, after the domestic epidemic was brought under control, foreign countries were greatly affected by the epidemic, and many overseas orders were transferred to the domestic market. When shipping from China, the shipping price began to rise. According to Liu Wang's prediction, this round of price increases will continue until the first quarter of next year.
An unnamed person in charge of maritime logistics said: "As the epidemic stabilizes, this hot market will continue into the first half of next year, or even longer."
"This wave of increase in container shipping prices has driven the adjustment of the entire foreign trade sector, breaking the laws of the past decades in the industry. Not only ocean freight, air freight and land transportation have different levels of influence and changes. The epidemic has accelerated the entire large trade sector. The consolidation and adjustment of the shipping sector will gradually move towards intensive development. Shipping companies have become monopolistic after years of integration and mergers. The aviation sector and the land transport sector are also rapidly integrated, and a new chapter will emerge in the future foreign trade field." People say so.
According to Huang Tianhua, chairman of the China Container Industry Association and vice president of CIMC, predicted that the shortage of containers may continue for about six months . He said: "We have monitored that if there are 500,000 new containers in China normally, they are in a completely healthy state if they are ready for use in the docks or ports, but the current tighter inventory is about 300,000 new containers. I expect it to be possible. In the next three months to six months, this slightly tense balance will continue. This is probably a trend in the current industry."
Although the industry is generally optimistic about the shipping industry, Liu Dian believes that the total global trade volume in 2020 will still drop a certain percentage from the previous year, but from the perspective of the shipping industry, it will definitely be from the third quarter to the fourth quarter. There will be a better market.
Liu Dian said: “Affected by the epidemic in the first half of the year, the uncertainties slowed down in the second half of the year, and the overall trend showed a relatively large rebound. Therefore, from a macro perspective, global international trade has rebounded to a certain extent. China is the first to resume the rebound led by the next."
" At present, the shipping industry is mainly affected by three factors :
Di Yi factor is that the global economy is expected to have a recovery, so after the third quarter, international trade has been warmer, led the field of shipping industry as a whole for the better, whether it is from container or just have some trade from the sea to pick up case .
The second factor is that with the signing of the RCEP agreement, a series of regional economic integration cooperation relations in East Asia and Southeast Asia will improve, which will benefit the import and export trade of China and related countries.
The third factor is that although the epidemic has not been eliminated on a global scale, all countries are in short supply, such as medical supplies, production supplies, and living supplies. China is now the world's largest trade surplus country. Under such circumstances, China's export trade, including part of its import trade, will also get a relatively large rebound in demand, and at the same time promote the rise of a series of shipping-related industry indexes in related fields, including the container shipping index. "Liu Dian said.
