The continued increase in container prices on Asia-Europe routes will affect my country’s exports to Europe?

According to the latest data from the Drewry World Container Index released by the international logistics consulting firm Drewry, the current 40-foot container freight from Shanghai to Rotterdam has risen to US$10,174, a 3.1% increase from the previous week and a year-on-year increase of 485%. From a global perspective, the World Container Freight Index (WCI) rose to US$6,257, a year-on-year increase of 293%. Both indexes reached their highest levels on record in 2011. Drewry said that the current price of container freight from Asia to Europe continues to rise, and traders will face increasing cost pressures in the supply chain.

Zhou Shihao, the founder of the international logistics service platform "Where to Go", said in an interview with a reporter from China Business News that the main reason for the rise in container freight rates is that supply is less than demand. At present, June and July may be the last high point of container prices. After the new crown pneumonia epidemic continues to improve and the vaccine coverage rate increases, the international supply chain will recover to some extent, and the logistics price will gradually decline. However, the decline may not be too high, and container prices will still hover at high levels.

Container freight on Asia-Europe routes breaks through US$10,000 for the first time

Drewry's data shows that behind the rise in container prices, the demand for 20-foot and 40-foot containers is the most in demand, and the goods they carry account for most of the global trade in goods.

Zhou Shihao believes that this reflects the phenomenon that the supply of containers is less than demand in the context of the recovery of global trade. He said that from the supply side, although the number of containers has not changed, due to the impact of the epidemic and the Suez Canal incident, the availability of containers on the market has decreased. From the demand side, due to the better control of the epidemic situation in my country, the recovery effect of foreign trade is better, which in turn increases the demand for containers.

Drewry said that disruptive factors such as the blockage of the Suez Canal and congestion in European ports continue. At present, in the three major European ports-Rotterdam Port in the Netherlands, Antwerp Port in Belgium and Hamburg Port in Germany, the container throughput is larger than the same period in previous years and tends to be saturated.

Rising container prices have had a considerable impact on foreign trade companies. The "Report on the Digital Development of the International Logistics Industry" jointly issued by the China Communications Information Center and the Shanghai International Shipping Center stated that more than 80% of the interviewees believed that due to lack of containers, explosions, delays and other reasons, the implementation of logistics plans was uncontrollable and business development The difficulty is greatly increased. This has caused a sudden increase in the amount of advances for freight forwarding companies, and difficulties in corporate capital turnover.

Xue Dong, general manager of Zhejiang Anji Wanbao Furniture Co., Ltd., said in an interview with a reporter from China Business News that for traders exporting to mature markets, the unit price of their goods is not high, and they are more sensitive to the increase in logistics, exchange rates, and raw material prices. In fact, in the entire logistics and transportation link, not only the price of containers has risen, but the logistics costs of inland transportation, overseas logistics, and overseas warehouses are also rising.

Zhou Shihao also believes that logistics costs are more important for small and medium traders. "Before the outbreak, a 40-foot-tall container from Asia to Europe only cost about US$2,000. Now it has risen to about US$10,000, and the price has doubled five times." He said.

How to reduce the cost of international logistics

According to many experts interviewed by reporters, finding alternatives to traditional shipping routes and improving shipping efficiency are the main methods to reduce the logistics costs of Asia-Europe routes.

In terms of finding alternatives, Li Xuan, a senior analyst at Haitong Securities Transportation, said in an interview that the Asia-Europe line trade is mainly seaborne, with the China-Europe railway train as a supplement. Currently, 60% of China's exports to Europe go through the Suez Canal, the China-Mediterranean route. In terms of logistics, the main focus of enterprises is on price and transportation efficiency. In the context of frequent black swan incidents and rising shipping prices, shippers may reconsider alternative solutions.

He further explained that the common China-Mediterranean sea route is characterized by cheap prices and short distances. As for the alternative, that is, the China-Cape of Good Hope-Europe shipping route, it is characterized by slightly higher prices and longer detour distances. Another alternative is the China-Europe Express, which is characterized by short time but requires coordination of multinational railway systems.

In terms of improving the efficiency of maritime transportation, Zhou Shihao believes that first, shipping companies can strengthen dispatching and transport empty containers stranded in Europe back to China to increase the availability of containers. Second, companies can explore the digitalization trend of logistics and enhance the efficiency of logistics transportation.

At the end of April, the Ministry of Transport replied to netizens’ messages about “detention of shipping containers and soaring costs”, stating that our ministry actively coordinated with relevant liner companies to optimize the allocation of shipping capacity on Chinese routes, increase the capacity of Chinese routes and the return of empty containers, and minimize overseas shipments. The impact of large-scale delays in shipping schedules caused by port congestion on China's import and export transportation.

In terms of logistics digital transportation, Tan Limin, the founder and CEO of Westwell Technology, said in an interview: "Since last year, the logistics market has become more urgent for artificial intelligence, remote operation, and unmanned operation."

He gave an example to reporters that last year, the company successfully delivered multiple unmanned smart straddle carriers and fully electric unmanned truck fleets to terminals in Sweden, Thailand and other places. "In the process of loading and unloading at the port, a series of auxiliary equipment such as trucks are needed. A medium-sized terminal requires an average of 200 trucks. At present, the number of truck drivers is small. In order to prevent cross-infection of drivers during the epidemic, the efficiency of manned trucks has been improved. Not high. The use of automation, unmanned driving and other measures can increase the efficiency of trucking operations, improve the port operating environment, and thereby increase the efficiency of maritime transportation." He said.