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Insight | Time: Jul 14 2021 10:35AM
Stressed container marine market may impact Christmas shopping season
 
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The transportation cost of one container from Shanghai to Rotterdam exceeded $10,000 in late-May. According to the data from Drewry World Container Index, the freight has been at $12,795 recently, up by around 600% on annual basis. It needed near $10,000 for a container from Shanghai to US, hiking by 229% within a year. The sea freight is expected to rise further in the following week.

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Source: Shanghai Shipping Exchange 


The demand on container marine market remained high in China, and the freight of most routes held stable last week. According to the data from Shanghai Shipping Exchange, the China containerized freight index was at 3932.3 on Jul 9, up 0.7% compared with last period.

European route:

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Source: Shanghai Shipping Exchange 

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Source: Shanghai Shipping Exchange 


Production and life has gradually recovered in some nations in Europe with eased pandemic, while some nations including UK were hit by the Delta Variant, ending up with growing demand for pandemic prevention goods and necessities for life. Transportation demand was high. Congestion appeared in some ports with stricter pandemic prevention measures.


On Jul 9, the freight rate from Shanghai to basic ports in Europe was at $6,741/TEU. The average utilization rate of seats at Shanghai port was near 100%. As for the Mediterranean route, transportation demand was steady and the average utilization rate of seats at Shanghai port was above 95%. On Jul 9, the freight rate from Shanghai to basic ports in Mediterranean was at $6,746/TEU.

North America route:

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Source: Shanghai Shipping Exchange  

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Source: Shanghai Shipping Exchange 

 

The pandemic has been largely controlled since the deployment of the vaccine in US, while the daily number of infected persons started rising with the spread of Delta Variant recently. The import demand sustained high in terms of economic activities and pandemic prevention. The marine market was still bothered by stagnated containers, unsmooth transportation and the congestion at ports amid the pandemic. Such stalemate failed to see big breakthrough temporarily.The average utilization rate of seats in W/C America Service and E/C America Service was still near 100% at Shanghai port. The sea freight held largely steady last week.


Recovering demand from customers and enterprises in US was one of the reasons for soaring sea freight, and short container was another reason for tight supply on the market.


The shipping capacity of the Trans-Pacific eastbound route was especially tight. Project44 warned that the Suez Canal and Yantian International Container Terminals (YICT) have resumed operation completely, while hiking demand for goods related with Christmas Day and the coming of transportation peak season amid the pandemic will pose pressure on supply chain. Many Vessels are waiting to enter the ports of Los Angeles and Long Beach.


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Source:  Port of Los Angeles


According to the latest data from the Port of Los Angeles, import volume is expected to hit another peak in recent 3 weeks after touching the earlier peak in May, which may tend to rise further.


The number of ships arriving at US West Coast ports delayed by more than a week from January to May 2021 reached a staggering 695, according to Sea-Intelligence ApS, a Danish shipping research agency. Only 1,535 ships were delayed for more than a week between 2012 and 2020, the agency said.鈥


The interruption of YICT has recovered but sill impacted the ports in South China due to the long suspension. According to related report, disordered supply chain may continue for a long period this year and the influence on seasonal transportation may continue into the Christmas Day.


The delivery of many retail goods is delayed after the freight handling was affected by the COVID-19 pandemic in Yantian. Many famous suppliers including Amazon and Walmart in retail industry warned that it will be a chaos amid tight containers. Pressure on global shipments could leave buyers empty-handed this Christmas shopping season. Suppliers including Amazon and some importers in US are willing to pay a premium, eager to purchase cargos, as some cargos are still stagnated in Yantian. There are not enough stocks to satisfy customers' demand, which may impair the sales during Christmas. According to the latest data, the inventory of apparels in wholesalers in US declined by 16.8% on the year in May but slightly increased by 3.4% on the month.


Short containers, the congestion of ports and hiking sea freight may be hard to improve amid peak season. On the contrary, the congestion and delay may deteriorate further. The pressure on container marine market is still expected to remain severe before the Lunar Chinese New Year holiday in early-2022. 

[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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