Sea freight surge shattered expectations of price cuts, challenging brass ball valve manufacturers in China

NAFCO | Brass Ball Valve Manufacturer
Brass ball valve suppliers in China have been facing big challenge for sea shipment stability and high sea freight in 2021, caused by global corona virus spreading. The situation becomes slightly better after electricity limitation by the government, but how it will be going for the sea shipment and freight in 2022?  Let's take a view.

Current improvements

It is reported that the global short-term container freight rate has generally stagnated before, and even the freight rate of the core trans-Pacific trade route has dropped.

However, although the freight rate has fallen, it may only be a temporary phenomenon. It is worth noting that the load factor of the Shanghai-Europe and American routes has continued to maintain close to the full load level recently, and the freight rate is at a high level, and there are signs of continuing to rise.

Data show that last week (November 29-December 3) China Export Container Freight Index (CCFI, reflecting the settlement price of consolidation companies) was unchanged from the previous week, and Shanghai Export Container Index (SCFI, reflecting the booking price of consolidation and forwarding companies) The month-on-month increase was 2.7% (see the chart below). The Baltic Container Freight Index (FBX, reflecting freight forwarding settlement prices) has fallen by about 15% since its September high, and has increased by 0.08% from the previous week.

Sea freight in Southeast Asia skyrocketed

Recently, the sudden increase in freight rates in Southeast Asia has given China brass ball valve manufacturers a headache. Due to the recovery of production and consumption in Southeast Asia, there is a strong demand for shipping and air transportation in the region, and freight rates have skyrocketed!

It is understood that the space in Southeast Asia is now very hot and tight, and the freight rate has also increased a lot. Recently, the high container has been rushing for three or four thousand US dollars, and Thailand is about 3,400 US dollars. Before the epidemic, the freight rate may be only at the level of 200 to 300 US dollars. During the epidemic, it reached more than 1,000 US dollars. The highest price was more than 2,000 US dollars around the Spring Festival in 2021. The current price should be the highest point since the epidemic.

According to data from Ningbo Shipping Exchange, in November, the freight index of the Thai-Vietnam route increased by 72.2% month-on-month. In the past week, the freight index of the Singapore-Malaysia route increased by 9.8% month-on-month. While the freight rates in Southeast Asia have skyrocketed, the freight rates in China and the US, which have just subsided, have recently rebounded slightly.

Freight rates for long-term ocean freight contracts continue to rise sharply

According to a report released by shipping data consulting company Xeneta, those carriers who wish to lock in long-term ocean freight contracts will still face high freight charges.

Xeneta's statistics show that in the past November, the average price of global long-term shipping contracts increased by 16%, a cumulative increase of 121% year-on-year. Prior to this, the increase in long-term contracts for all major shipping channels in July reached a record 28%.

Xeneta CEO Patrik Berglund pointed out that the perfect storm formed by continuous high demand, maximum freight volume, still congested ports, changing consumer habits, and widespread supply chain disruption is driving a surge in shipping costs. "We have never seen such a situation before."

Among the latest long-term ocean freight contracts, freight rates on routes to and from the United States have increased the most. According to Xeneta's calculations, long-term import freight contracts in the US market rose by 39% in November and a year-on-year increase of 122%. US long-term export freight contracts also rose 9% that month.

Lack of boxes eases "One box is hard to find" to "One cabin is hard to find"
Previously, container turnover, slow return, and "difficult to find a container" were one of the reasons for the high ocean freight rates. What changes have taken place today?

At the container terminal of Shenzhen Yantian Port, container ships are berthing at almost every berth, and the entire terminal is basically operating at full capacity. It is understood that in the small program of Yantian Port Logistics, there were occasional reminders of a shortage of empty containers in October, and there were no more empty containers in November.

According to data from the National Bureau of Statistics, in the first eight months of this year, Chinese metal container output has increased by 1.7 times year-on-year. Although the problem of lack of containers is temporarily resolved, the problem of lack of compartments is still serious. Not only has "consolidated" and "combined containers" become the norm, and even the corners of the containers, companies have also made up their minds.

The shipping market continues to have a high fever. In order to ship goods, brass ball valve suppliers in China are racking their brains. Small cargo owners consolidate and combine containers, while large cargo owners and agents have thought of "chartering ships" to solve supply chain problems.

High freight rates may continue in the short term

Since Q4 of 2020, the volume of the Asia-North America route has continued to increase at an "unexpected" high, and the capacity flexibility of US ports and inland supply chains has been limited, causing the freight rate to soar several times to a historical record. However, the traditional peak season for the US route in Q3 of 2021 The month-on-month decline in cargo volume may be partly due to the increase in congestion at the US West Port.

Price is the most sensitive signal reflecting the fundamentals of supply and demand. Guotai Junan analyst Zheng Wu recently released a research report saying that the overall volume of goods increased by 20% in the third quarter, lower than the second quarter. According to the Asian shipment data statistics on the CTS website, the volume growth in September was only a short-term increase. It is estimated that the volume will fall in October, and the amount of US imports from China in October will also drop month-on-month. Taking into account that the quotations of freight forwarders have fallen by nearly 20% in the past two months, and the growth rate of North American air cargo has fallen, it is recommended to be alert to the risk of demand inflection points.

However, Fan Lei, an analyst at Guohai Securities, countered that the decline in shipping prices does not mean that the scale of exports will weaken in the short term. On the one hand, the decline in prices is mainly reflected in the secondary market, in the primary market of container freight. , The quotations of shipping companies and their direct agents (first-level freight forwarders) are still strong, still significantly higher than the pre-epidemic levels, and the demand side of the shipping market remains strong overall. On the other hand, since September, the global shipping supply situation has gradually improved and constitutes a certain support for exports. The market's expectation that this improvement will continue is an important reason for the downward price adjustment of freight forwarders in the secondary shipping market.

The latest data shows that the relevant index reflecting the freight rate continues to rise, confirming from the side that the demand for container shipping is still strong. In addition, the recent emergence of new mutant strains of "Omicron" has intensified concerns about global economic recovery. Some insiders believe that the epidemic will benefit freight rates, and high freight rates may continue in the short term.

The Bottom Line

Sea freight poses a big factor of importing China brass ball valves, stable shipment plans and good sea freight is very to keep brass ball valve supply chain for global brass brass valves importers. We will keep notice of changes of sea freight and make best prices for our brass ball valve customers all over the world.
If you have brass ball valves needs, you can contact us, we will provide you with help and give you the best solution.
Leave a Comment
Your email address will not be published. Required fields are marked *
Submit Comment
Contact Us Now
China Brass Ball Valve Manufacturer & Supplier | NAFCO Brass Valve
No.555 Juxian Road, Hi-tech Zone, Ningbo, China 315000
Your Trustworthy Brass Valve Supplier
We are a professional brass valve manufacturer in China, and we are constantly innovating so that our customers can have better products and services.
        SiteMap.html    SiteMap.xml    Terms of Service      Privacy Policy
Enter your inquiry details, we will response within 24 hours.
Name can't be empty
E-mail can't be empty
Company can't be empty
Phone can't be empty
Products can't be empty
Message can't be empty
Verification code error