Since October, freight rates on Southeast Asian routes have quietly risen under the “cover” of European and American routes. Taking Ningbo to Jakarta as an example, the increase in 40-foot containers was as high as 371%. The price increase is still in progress.
Freight rates of various shipping companies continue to increase
According to Yang Ming Shipping’s latest Southeast Asia line quotation, since December 16, the overtime and additional call (AD HOC) freight rate has increased by US$600 per TEU and US$1,200 per FEU, with the highest increase of more than 100%, setting a new record for the Southeast Asia line. Maximum increase.
Wanhai Shipping also announced that starting from December 20, it will increase the price by US$400 per TEU and US$800 per FEU for the three ports in Thailand. Previously, Wanhai Shipping had increased the freight rates for routes to Singapore, Malaysia, Thailand, Vietnam and Indonesia at the beginning of the month. The increase was between US$600-800 per FEU, and the increase for the Philippines route also reached US$300. Wanhai Shipping explained that there has been an urgent shortage of space on the Asian line recently, and the cargo volume is too large in an instant, and the price has also been adjusted in line with market demand.
A closer look at the reasons for the price increase in Southeast Asia shows that the end of the year is already the peak season for intra-Asia shipments. In addition, the general unblocking of Southeast Asia in October released a large amount of transportation demand, and the overall demand is already at a high level. However, in July and August, due to the severe epidemic in Southeast Asia and the booming European and American shipping markets, shipping companies transferred Asian shipping capacity to ocean shipping lines. Since then, ports in the West and West, represented by Los Angeles and Long Beach, have experienced long-term port congestion and disordered shipping schedules. , resulting in the inability to recover transportation capacity in time, and a serious shortage of cabins on the Southeast Asia line.
This capacity allocation trend can also be seen from Wanhai’s revenue structure. Wanhai mainly focuses on the Asian line, and also opened the COSCO line. In terms of revenue share in the first three quarters of this year, the American line accounted for 40%, which has exceeded the Asian line’s 31%.
However, there are still some positive signals in Southeast Asia recently.
Redeploying ocean shipping capacity to Asia lines
Based on the current market performance of the Southeast Asian line, some shipping companies have begun to transfer capacity from the ocean line back to the Asian line. Wan Hai Shipping said it is shifting ships from its six Asia-US West routes to its intra-Asia routes. From the shipping company’s perspective, compared with the European line’s 30-50-day voyage and the persistent congestion in the West Coast, the Asian line’s round trip time is short, its capacity circulation efficiency is high, and the current freight rate is at a high level. Taken together, The overall profit expectations are relatively impressive.
From the perspective of the global supply chain, since new shipbuilding generally cannot be put into the market until 2022-2024, the shipping capacity in the market in the past two years has basically been transferred between various routes, which is equivalent to demolishing the east wall to make up for the west wall. , and cannot fundamentally solve the problems of supply chain imbalance and port congestion. For example, the congestion at Tanjung Pelepas Port in Malaysia is quite serious, affecting the receipt of goods to some Southeast Asian destinations.
Spending money on ships to expand shipping capacity
However, as shipping companies are generally optimistic about the market prospects of the near-ocean line, the supply of shipping capacity on the near-ocean line is expected to improve to some extent next year. Wan Hai pointed out that with the launch of the Regional Comprehensive Economic Partnership (RCEP) and the unblocking of Southeast Asian countries, the demand in the near-ocean line market has been strong. “I can’t say that the freight rates in the near-ocean line have increased, but they will maintain high-end levels.”
Based on this, Wan Hai behaved quite boldly in buying a boat. On December 7, it purchased two new ships that were just delivered this year at a price of US$39 million each. The original cost of the ship was about US$28 million, and the current cost is about US$35 million. Wan Hai finally bought it for a high price of US$39 million. Including the newly purchased ships in the past two years, it is expected that Wanhai will have 41 new ships with a shipping capacity of more than 250,000 TEU put into operation from 2022 to 2024.
Have you shipped to Southeast Asia recently? How do you feel?
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