The overseas demand is weak, the "order shortage" is spreading, the shipping price is deeply adjusted, and the shipping price once fell by 60%. Will the era of shipping companies earning hundreds of b
Recently, the price of shipping is falling rapidly, which seems to indicate that the "profiteering era" of shipping is coming to an end.

Image source: Every reporter Zhang Yunshe
On September 27th, Freightos Baltic Container Freight Index (FBX) showed that the global container freight rate was 4085 USD /FEU. In addition, the freight index of several domestic export containers has dropped. As of September 23rd, China’s export container freight index (SCFI) was 2,475.97 points, which was 5.1% lower than that of the previous period, including the routes in Europe, the eastern United States and the western United States.
From July to September in previous years, it was the traditional peak season for domestic goods export, but this year, at this node, the shipping cost has dropped one after another, showing the phenomenon of "the peak season is not prosperous", which inevitably makes the outside world confused.
Chen Zhen, a marine futures researcher at Founder Mid-term Futures Research Institute, told the 21st century business herald reporter that looking at the SCFI comprehensive freight index from 2010 to 2022, the freight rate in late September of that year dropped compared with that in early January, and there were "low peak seasons" in the third quarter of eight years. However, like this year, it was really rare for the market to fall for 17 weeks from the beginning of the year and for 15 weeks again from the middle of the year, with a drop of 60% in the first nine months. "The last time such a bear market happened was in 2015, and the cumulative decline in the first three quarters of that year was only 43.2%." He added.
The price of shipping, which has been falling for days, has even fallen to a new high. According to the staff of a freight forwarding company in Tianjin, the price of shipping about 40-foot TEUs to the west coast of the United States was about 10,000 yuan at the beginning of the year, but now it only needs about 3,000 yuan, a drop of over 60%.
Although many shipping companies have completed the goal of booking ships to expand their capacity, they have to make adjustments in the case of falling shipping prices. According to the data released by Drewry, a maritime consultancy, during the five weeks from September 19th to October 23rd, among the 750 scheduled voyages on major routes such as trans-Pacific (601099), trans-Atlantic (600558), Asia-Northern Europe and Asia-Mediterranean, 122 voyages were cancelled, with a cancellation rate of 16%.
Lan Xi, an analyst of Dongzheng Futures Shipping, told the 21st century business herald that the freight rate is expected to fall before the reality, and the freight rate is oversold under the influence of emotion. Starting from October, liner companies will take measures to suspend flights and protect prices to ease the downward trend of freight rates.
What are the reasons behind the drop in shipping prices from a height? When the shipping company’s capacity expansion hits the downward cycle of Shanghai shipping price, how will the profit be affected?
From "One Case Hard to Find" to "One Goods Hard to Find"
In fact, since the end of 2021, shipping prices have shown signs of "cooling down". And this year, the trend of the decline in shipping prices suddenly became rapid and rapid.
On September 27th, Freightos Baltic Container Freight Index (FBX) showed that the global container freight rate was 4085 USD /FEU. You know, on September 13th last year, the global container freight rate once soared to 11,134.44 USD /FEU, and today’s freight rate is only equivalent to that of January last year. According to this estimate, the global container freight rate has fallen by 63% from a high level so far.
Talking about the current drop in shipping freight, Zhang Yongfeng, chief consultant of Shanghai International Shipping Research Center, said in an interview with 21st century business herald that although the spot freight of international container shipping dropped more than last year’s high level, it was still higher than the pre-epidemic level as a whole. "From the perspective of industry cycle, the pre-epidemic container transportation market has been in the stage of bottoming out, which was greatly affected by the epidemic in the previous two years. The current drop in freight rates is also a normal fluctuation and a relatively rational callback. "
Although many interviewed experts believe that this wave of market is a normal return after the previous price surge, it is still quite rare that the superimposed freight rate drops sharply in the "slow peak season".
Zhang Yongfeng said: "In the past, July to October was the traditional peak season for container exports, and the export demand was relatively high. However, this year’s’ poor peak season’ was mainly due to the unsatisfactory performance of external demand."
He further stated that this phenomenon is mainly caused by the following factors: "First, Europe and the United States continue to replenish stocks, and commodity stocks are high. For example, the three major inventory indicators in the United States are at a high level; Secondly, in the context of the continuous interest rate hike by the Federal Reserve, the epidemic subsidies have been cancelled, and global liquidity has been tightened. The major economies in the world are deeply affected by rising raw material and energy prices and high inflation, and consumer demand has been greatly affected; At the same time, the recovery of overseas production capacity has also reduced the proportion of imported goods from China to some extent; In addition, the overall congestion situation in overseas ports has eased, the ship turnover rate and quasi-shift rate have increased rapidly, and the ship loading rate has declined. These factors have prompted the correction of shipping prices. "
In Chen Zhen’s view, the mismatch between supply and demand of transportation capacity, the shortage of supply chain and the persistent inflation abroad will continue to affect the global container transportation market. He said that even if the price of the shipping market falls further in the future, it is normal, because although the current overall freight rate has fallen below the same period in 2021, it is still much higher than the same period before 2020.
According to the data, in 2019 before the outbreak, the global average freight rate index (FBX) of Baltic containers was about 1400 USD /FEU. It can be seen that although the current shipping price has dropped, it is still much higher than the price at that time.
Although the freight rate has returned to rationality, the lack of external demand has become a new problem that many freight forwarding companies are worried about. A person in charge of a freight forwarding company in Guangzhou told the 21st century business herald that the most worrying thing at present is that the external order quantity continues to be weak. "If the external demand problem is not solved, the uncertainty of foreign trade will increase, and the entire container transportation market will be affected."
The medium and long-term shipping market will be at a low point.
In 2021, affected by factors such as supply chain interruption and surge in demand, international freight rates soared sharply. It is precisely because of this that many shipping companies unexpectedly ushered in a "highlight moment."
Looking back on the performance of many shipping giants in the past year, it can be said that they have earned a lot of money. According to the financial report of Maersk Group, the global shipping giant, its annual revenue in 2021 was US$ 62 billion, up 55% year-on-year, and its annual profit before interest, tax, depreciation and amortization (EBITDA) tripled to a record US$ 24 billion, setting the highest profit level in the history of Danish enterprises.
Coincidentally, other major shipping companies in the world, such as mediterranean shipping company, CMA Steamship and HerBeurotte, also saw their performance soar. He Beurotte’s profit before interest, tax, depreciation and amortization in 2021 was $12.8 billion, a year-on-year increase of 316.1%; The net profit of CMA in 2021 rose by more than 900% year-on-year.
According to Drewry, a shipping consulting company, the total profit of the container transportation industry was only about 7 billion US dollars in 2019, and it expanded to 26 billion US dollars in 2020, and soared to 210 billion US dollars in 2021. This figure is expected to rise to 270 billion US dollars in 2022.
With record performance, shipping companies have been able to lay out their capacity in a big way. Taking COSCO Haikong (601919), a subsidiary of China shipping company COSCO Shipping Group, as an example, it is reported that after the epidemic, COSCO Haikong has placed orders for shipbuilding for four times, with new orders reaching 34 container ships and 590,000 TEUs, and its capacity expansion scale is second only to that of mediterranean shipping company and CMA. Among the shipping companies that expand their capacity, mediterranean shipping company has the largest booking scale. Since the beginning of this year, mediterranean shipping company has ordered and built 42 LNG dual-fuel container ships this year, with a value of more than 6 billion US dollars.
At present, the new ships ordered by shipping companies are launched one after another, and the transportation capacity of shipping companies will be greatly improved. Clarkson, a shipping brokerage company, predicts that the container fleet capacity will increase by 3.7% year-on-year this year and will increase by 8.1% in 2023.
In this regard, Chen Zhen said that many liner companies’ new ship orders were confirmed in the last year to 1.5 years. Considering the shipbuilding cycle of 1.5-2 years and the backlog of orders, it is very likely that after the new ship is launched, it has entered a bear market, so the decision to expand the capacity on a large scale at a high price is actually open to question.
Zhang Yongfeng also believes that liner companies have increased their capacity in the past two years, and a large number of new shipbuilding orders will be delivered in the next year, which will inevitably have a certain impact on the spot market. "Especially for some high-level shipbuilders who lack stable route networks, customer groups and ship management capabilities, they will probably face greater cost pressure."
It was hard to wait until the new ship was launched, but in the face of falling shipping prices, some liner companies had to take suspension measures to protect the price. In this case, will the profitability of shipping companies be affected? Zhang Yongfeng believes that the profitability of shipping companies will be relatively stable due to the high proportion of liner company directors’ associations between the end of last year and the beginning of this year and the relatively stable negotiated price.
However, the current price of the long association has been seriously upside down with the spot price. As of September 23rd, China’s export container freight index (CCFI), which reflects the overall transportation market (including spot agreement and long-term agreement), was 2,475.97, down 5.1% from last week, indicating that the coordinated price and spot price were upside down. Therefore, there are some cases in the market where some container shipping customers tear up the long-term association and ask for a new long-term agreement with the shipping company.
"As of August, there are 927 unfinished container ship orders in the world, totaling 7.034 million TEU, accounting for 27% of the existing total capacity, which is 1.4 times of the total capacity of the top ten liner companies in the world. This part of the new ship will be launched in 2023-2025. Moreover, although the new shipping environmental protection policy will be implemented next year, some ships will be eliminated or the speed will be limited, it is expected that more countries will relax the epidemic control measures and the ship turnover efficiency will further rise. Therefore, the original mismatch between supply and demand of transportation capacity will be greatly alleviated, and the market can no longer support the previous high freight rate. " Chen Zhen told reporters that the shipping market will be at a low point for a long time, and the performance is also difficult to improve significantly.
Lan Xi believes that the subsequent decline in freight rates is expected to slow down, but whether there will be a rebound depends on whether the marginal supply and demand can be significantly improved and whether the market sentiment will be repaired. She told reporters that even if the shipping price will rebound, it will only be staged. In the medium and long term, the weak cycle of freight rate is a foregone conclusion.

















