Buy Fabric Fabric News Shanghai welcomes the resumption of production and work, but the market still has a big trouble! 477 cargo ships are waiting to be unloaded at East China Port, and sea freight rates have fallen for 12 consecutive weeks!

Shanghai welcomes the resumption of production and work, but the market still has a big trouble! 477 cargo ships are waiting to be unloaded at East China Port, and sea freight rates have fallen for 12 consecutive weeks!



As China’s economic center, the Yangtze River Delta’s foreign trade export throat, and the location of the world’s largest container port, Shanghai’s contin…

As China’s economic center, the Yangtze River Delta’s foreign trade export throat, and the location of the world’s largest container port, Shanghai’s continued logistics “paralysis” has brought a serious impact to the local and global shipping and logistics industries.


As Yu Chengdong, CEO of Huawei’s consumer business and CEO of smart car BU, said, “If Shanghai continues to be unable to resume work and production, all technology/industrial industries involving the Shanghai supply chain will be completely suspended after May.”


Zhang Wenhong also said before that if work is not resumed as soon as possible, the death rate will be higher than that of COVID-19.

The resumption of work and production has become a light in the hearts of many people.


In the past two days, a large number of enterprises in key industries are gearing up. After Shanghai issued a policy to promote the orderly resumption of work and production of industrial enterprises on the evening of the 18th, many large manufacturing companies, including Tesla’s Shanghai Gigafactory, have reported news of resumption of work and production.



On the other hand, in Jiangsu and Zhejiang and other places around Shanghai, due to the continued epidemic lockdown, more and more local companies have begun to suspend production due to logistics and transportation. It can be said that the entire Yangtze River Delta Economic Belt has been affected.


From the perspective of the textile and chemical fiber market, supply and demand have been weak recently, and the market has been sluggish. Coupled with the continued rise in international oil prices, the cost of chemical fiber remains high, and it is difficult to smoothly transmit it to downstream. The operating rate of the chemical fiber industry has declined, and the economic benefits have shrunk significantly. Among them, the biggest impact is the logistics and transportation problem across provinces (municipalities). In recent days, due to the impact of the COVID-19 epidemic, traffic control has been tightened in various places. Due to factors such as inconsistent epidemic prevention and control policies across regions, “one size fits all” in some areas, and highway control leading to congestion. For truck drivers, even if there is an epidemic in a city on the expressway or off the expressway, they will be isolated on the expressway and normal logistics will not be possible. Not only that, with checkpoints set up layer by layer in the epidemic control areas, control areas, and prevention areas, detours will inevitably increase transportation costs. Coupled with the recent surge in oil prices, transportation costs have increased by 30% in the past week, and you will have to pay for a trip. Thousand dollars. This has brought serious challenges to the current truck freight and logistics parks.


In response to this situation, the Ministry of Transport has recently issued multiple notices to ensure smooth traffic. After the Ministry of Transport held a meeting on the logistics support coordination working mechanism on April 7, requiring freight logistics to be smooth and smooth, and proposing three directional requirements for national pass, unified regional policies, and interconnection and sharing of control information, in the past two days, the Ministry of Transport It is required that illegal closures of highway checkpoints be rectified before April 15th! With a series of more specific policy notices and requirements being released one after another, the problems of domestic logistics and transportation are being alleviated.
Whether it is Shanghai’s guidance on resumption of work or the Ministry of Transport’s notice on ensuring smooth traffic and smooth operation, it is a good thing for the current situation! However, the house leaked and it rained all night. With the smooth flow of domestic logistics and transportation, the trouble caused by shipping congestion became more and more serious!

Freight prices have fallen for 12 consecutive weeks! Shanghai blockade and global port blockade have impacted the container shipping market
The severe epidemic situation in Shanghai and the continued impact of global port congestion on the container shipping market have caused the SCFI index to fall for 12 consecutive years and hit a new low since August last year. On April 8, the Shanghai Shipping Exchange announced that the latest Shanghai Export Container Freight Index (SCFI) fell to 4263.66 points, a weekly decrease of 1.96%, setting a record of 12 consecutive weeks of decline. Freight rates for the European line and the US-Western line both fell, with the European line reaching a 10-month low, but the US-Eastern line stopped falling and rebounded. Among them, the freight rate per FEU from the Far East to the United States West fell by US$56 to US$7,860, a decrease of 0.7%, falling for 5 consecutive weeks and hitting a new low this year; the freight rate per TEU from the Far East to Europe fell to US$6,157 for the 11th consecutive year, which was the lowest level in June last year. A new low since last month.


Data from the U.S. Department of Agriculture show that there were 5,587 ships in the global container fleet last year, carrying a total of 24.7 million containers. According to Bloomberg Intelligence estimates, this means that about 500 ships are currently queuing to enter the port to load and unload cargo. At the same time, it is understood that due to the epidemic, maritime transportation is congested, and the number of ships waiting in the waters near East China ports has increased sharply. The latest data shows that a total of 477 bulk carriers are waiting to transport goods such as metal ore and grain to China.


According to Ocean Network Shipping Company (ONE), due to port congestion in China and other parts of the world, about 10% of the world’s container ship fleet has been immobilized. Jeremy Nixon, CEO of ONE, said at the Marine Money Conference in Singapore on April 5 that container ships are stuck waiting in congested areas and consuming a lot of fuel. Only if the bottleneck can be solved can services be on time again.


The COVID-19 epidemic has entered its third year, and the global supply chain is still affected by manpower shortages and the impact of the epidemic. Industry insiders said that although port congestion on the West Coast of the United States has finally eased after months of delays, cities such as Shanghai and Shenzhen have been blocked, resulting in�The growing queues for ships offshore China are likely to worsen cargo shipment delays in the coming months and push up freight rates.

Many companies have almost no harvest, and May will be a key node in the market
If the previous problems in the logistics and shipping links due to shortages and price increases can still make up for part of the losses, then the continuous long-term supply shortages and rising raw material prices have made downstream demand expectations eventually worse, and the contraction of downstream production scale has made factories The gradual loss of profit advantages has caused enterprises to shift from a business environment dominated by variable costs to a situation where they begin to worry about their own fixed costs, such as employee costs, equipment depreciation, site rent, etc., and finally lead to negative phenomena such as the bankruptcy of downstream enterprises, which makes the industry The scale has shrunk, and the demand has decreased, and the upstream supply has also begun to shrink, eventually entering a domino effect in which the downstream industry also falls, and the upstream industry also falls.


All in all, the butterfly effect caused by the epidemic is everywhere. According to backward deduction, two phenomena will appear in the middle and lower reaches. First, the domestic epidemic is still difficult to control in May, and terminal demand is sluggish and orders are still difficult to pick up. Then the middle and lower reaches companies are forced to Continue to reduce the operating rate and stop production to preserve survival strength. Second, the domestic epidemic has been fully controlled, production liquidity has recovered under the guidance of national stimulus policies, and domestic low raw material inventory levels have been replenished, driving upstream sales turnover rates to improve and prices to stabilize.


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