Source: South China Futures
Abstract
Recently, Maersk launched the European FAK price implemented on June 17, in which the Asian port-Rotterdam / Felixto: 20DC quoted US $3325 / TEU, 40DC/40HC quoted US $6500 / FEU, and each box freight increased by US $500 / TEU and US $1000 / FEU respectively compared with the quotation at the beginning of June, when the focus of index fluctuation became "4200 4400".
The sharp trend of European freight rates reminds us of the historic market set by the United States during the epidemic. At that time, it was called by the market as "a rare market in a century". Nowadays, facing the same lack of cabins and boxes, will the European line copy the American market? What do they have in common? What are the differences? How to grasp the futures market?
We believe that the current European line is not ready to get out of the historical market of 2021, and the possibility of a big rise in the futures price of the Container Index (European line) in the coming month is also small, as European ships return one after another, the motivation of shipping companies to raise prices will gradually weaken, and then the market will reverse.
Under the influence of the lack of cabins and boxes, the freight rate goes up.
Since the shipping company started the road of price increase in early April, the price increase letter of the shipping company has been launched as scheduled after half a month. According to the range of spot price increases, after converting into an index, the center of gravity of the index has shifted from "2058-2380" in early April to "3700-4200" in early June.
Recently, Maersk launched the European FAK price implemented on June 17, in which the Asian port-Rotterdam / Felixto: 20DC quoted US $3325 / TEU, 40DC/40HC quoted US $6500 / FEU, and each box freight increased by US $500 / TEU and US $1000 / FEU respectively compared with the quotation at the beginning of June, when the focus of index fluctuation became "4200 4400".
During this period, the Container Index (European Line) futures ended the shock, achieving a technical breakthrough. According to statistics, during the period from April 10 to May 21, EC2406 contract, EC2408 contract, EC2410 contract, EC2412 contract and EC2502 contract increased by 92%, 118%, 104%, 71% and 55% respectively.
Futures prices rose (55%-118%) faster than spot prices (46%), so spreads weakened one after another. On April 10th, the SCFIS European settlement Freight Index was quoted at 2172.Horizonblockchaingamesinc14:00, the contract basis was 91.14,209.14, 440.64, 429.34 and 648.34 points respectively based on the closing price. On 21 May, the SCFIS European settlement Freight Index was quoted at 3070.53 points. Based on the closing price, the contract basis was-922.67 points,-1218.37 points,-460.27 points, 32.33 points, 638.53 points and 1042.23 points respectively.
Clues of lack of cabins and boxes
As of March 2024, the global gathering capacity during the detour period increased by 1.5% compared with the same period last year, an increase of 0.6% compared with that before the detour. At the same time, the proportion of global fleet capacity absorbed by the detour was expanded to 3.5%, which was 2 percentage points higher than that before the detour (2023.8-2023.11). Therefore, from this point of view, after the detour, the global gathering capacity has changed from loose supply to tight supply.
At the same time, the global container turnover efficiency has declined, and the phenomenon of lack of containers has gradually emerged. As of March 2024, metal container production increased by 156 per cent year-on-year, the fourth year-on-year growth rate of more than 100 per cent since 2001.
1 clues of lack of cabin
1.1 Why is there a lack of space? -- objective conditions for lack of cabin
N ship detour
At present, the global container ship is still in a detour state. According to statistics, from January 1 to May 9, 2024, the cumulative volume of container ships in the Red Sea is 5741, a decrease of 45.11% compared with the same period last year. Among them, the volume of 1000 + container ships was 3985, up 55.84% from the same period last year, accounting for 69.41%, up 44.96% from the same period last year, down 51.48% from the same period last year, accounting for 22.2%, and down 2.95% from the same period last year. The volume of container ships with type 8000+ decreased by 90.78%, accounting for 8.46% and 41.96%.
In terms of daily traffic, there are about 30 1000 + container ships, 9 3000 + container ships and 3 8000 + container ships.
Under the background of the decrease of container ship traffic in the Red Sea, the ship structure passing through Suez Canal has also changed greatly.
The volume of container ships in the western Indian Ocean remains at a high level. According to statistics, from January 1 to May 9, 2024, the cumulative volume of container ships in the western Indian Ocean was 41691, an increase of 61.39 percent over the same period last year. Among them, the traffic volume of 1000 + container ships was 11045, an increase of 20.01% over the same period last year, accounting for 26.49%, and a decrease of 9.13%, an increase of 52.67%, accounting for 36.42%, and a decrease of 2.08%, an increase of 131.36%, 37.08% and 11.21%, respectively.
In terms of daily traffic, there are about 85 1000 + container ships, 117 3000 + container ships and 119 8000 + container ships.
N Port capacity change
The detour increases the ship's sailing time, absorbs excess capacity, and the container transportation market changes from oversupply to tight supply. According to statistics, from December 19, 2023 to May 7, 2024, the average daily arrival capacity of European basic ports (Rotterdam, Le Havre, Hamburg, Antwerp and Felixstow) is 255493TEU, which is 6.87% higher than that of the same cycle before the detour. The average daily shipping capacity of European basic ports is 2028930TEU, which is-5.22% lower than that of the same cycle before the detour.
From the point of view of China's departure ports, from December 19, 2023 to May 7, 2024, China's major ports (Shanghai Port, Qingningbo Port, Shenzhen Port, Guangzhou Port, Qingdao Port and other eight major ports) have an average daily arrival capacity of 714533TEU, an increase of 27.11% compared with the same cycle before the detour; the average daily shipping capacity of China's major ports is 2521606TEU, which is-6.37% lower than that before the detour.
Singapore Port is an important transit port for global trade in goods. Statistics show that from December 19, 2023 to May 7, 2024, the average daily transport capacity of Singapore Port decreased by 23.62% compared with the same cycle before the detour, and the daily average shipping capacity decreased by 6.55% compared with the same cycle before the detour.
From the dynamic data of the transport capacity of the major transit ports, departure ports and destination ports in the world, we can draw a conclusion: after the detour, the sailing time of the ship is longer, and the delay rate of the shipping company is higher, in order to ensure the increase of the scheduled shift rate, the shipping company actively adjusts the shipping schedule and invests in the shipping capacity.
N shipments in major regions of the world
Since the beginning of 2024, there has been a marked increase in global consolidated shipments. From January 1 to May 8, 2024, the average weekly shipment volume of global container exports was 5590283TEU, an increase of 4.6 per cent over the same period since August last year and 13.31 per cent over the same period since January last year.
During this period, the average weekly shipment volume of container exports in Southeast Asia was 963452TEU, an increase of 1.55% month-on-month and 14.87% year-on-year.
The average weekly shipment volume of container exports in South Asia was 267457TEU, an increase of 2.7% month-on-month and 1.59% year-on-year.
The average weekly shipment volume of East Asian regional container exports was 1724926TEU, an increase of 2.86% month-on-month and 14.08% year-on-year.
The average weekly shipment volume of container exports in the African region was 243512TEU, an increase of 0.48% month-on-month and 16.87% year-on-year.
The average weekly shipment volume of Latin American regional container exports was 349117TEU, an increase of 4.79% month-on-month and 22.36% year-on-year.
The average weekly shipment volume of container exports in the Middle East region was 265795TEU, a decrease of 4.12% from the previous month and 4.62% from the same period last year.
The average weekly shipment volume of North American container exports was 400828TEU, an increase of 14.8% month-on-month and 15.48% higher than the same period last year.
The average weekly shipment volume of container exports in the European region was 1149623TEU, an increase of 8.68 per cent month-on-month and 12.45 per cent higher than the same period last year.
N high space utilization rate operation
Since the beginning of 2024, the utilization rate of European shipping space has been running at more than 90%, and such a high loading rate has supported the high operation of freight rates. The latest financial report shows that the revenue situation of shipping companies has gradually improved under the support of high freight rates.
1.2 how does the shipping company manage the space? -- the subjective initiative of lack of cabin
The goal of space management is to not only meet the needs of customer service, improve the utilization rate of space resources and customer cooperation, but also enhance the value of space resources and improve route revenue through a reasonable space allocation strategy.
In order to achieve this goal, shipping companies should consider not only from the customer dimension, but also from the benefit dimension. In terms of evaluation criteria, the former is more subjective and the latter is relatively objective. For example, the customer dimension consideration index includes the evaluation of customer cooperation potential, customer volume distribution in off-peak season, customer commitment and performance reputation; the benefit dimension consideration index includes different customer freight level and cargo flow contribution value.
For example, when the market is in an upward cycle, the demand for space from low-cost customers has risen sharply due to strong expectations of a rise in freight rates, further strengthening the tension of space. At this time, the shipping company will be evaluated according to the customer's freight level and contribution value, rather than releasing the cabin on a "first-come-first-served" basis.
Combined with the analysis of the global collection and transportation supply and demand data in section 2.1.1, and taking a look at the newly released China's import and export trade data in April, it is not difficult for us to find out that ships, electric vehicles, construction machinery and other products whose average freight accounts for a large proportion of the value of goods, exports increased sharply compared with the same period last year. And a large number of exports of these products take up a lot of space, naturally, shipping companies have the right to choose high-priced goods to take the lead in export, and then there is some so-called "cabinet dumping" phenomenon in the news.
Since Herberot established the revenue management system in 2011, other shipping companies (Maersk, COSCO Shipping, etc.) have also built their own revenue management system.
For example, the port of call of a container shipping company's AEU3 route is: Xingang-Dalian-Qingdao-Shanghai-Ningbo-Singapore-Piraeus-Rotterdam-Hamburg-Antwerp. The shipping company will find out the space allocation of each segment to maximize the ship's income when knowing the customer contribution value and space demand. (it is known that the whole ship space is limited to 18000TEU and the weight is limited to 198000 tons)
2 clues of lack of boxes
Since May 7, Changrong Shipping has purchased 10000 and 17500 containers respectively from Oriental International Container (Hong Kong) Co., Ltd. and Evergreen heavy Industry (Malaysia) Co., Ltd., totaling 27500 containers.
Maersk has also taken measures to deal with the current situation. To protect its supply chain, it has leased more than 125000 containers. "
In 2023, the global container ship capacity reached 28.33 million TEU (the current year's delivery capacity was 2.2 million TEU), an increase of 7.6 percent over the same period last year; container output exceeded 64.905 million cubic meters (≈ 2.5-2.7 million TEU). It is estimated that 2.7 million TEU will be delivered in 2024. According to the number of containers, the container increment will reach 405-5.4 million TEU to ensure the demand for containers.
2.1 Why is there a shortage of boxes? -- objective conditions for lack of boxes
N after the epidemic, the cost of moving empty boxes is increasing.
In fact, there is no substantial difference between the movement of empty containers measured by TEU*Miles and that measured by TEU. The question is how this matches the growth in full cartons. Compared with 2019, global TEU grew by 2.5 per cent, while TEU*Miles grew by 4.2 per cent. In round-trip trade alone, TEU grew by 7.8 per cent in December compared with 2019, while TEU*Miles grew by 8.0 per cent. This clearly shows that the need to move empty boxes is growing more than the need to move full boxes, and round-trip trade is growing 2.5 times faster than full-box trade. This means that the actual cost of first-journey transportation has risen, in fact, it means that over time, the first-journey shipper has to bear more and more of the cost of moving empty containers.
Using the interregional full-box transport data provided by Container Trade Statistics (CTS), we can roughly estimate the volume of empty containers to understand how the growing trade imbalance has affected the amount of work required to relocate empty containers. After avoiding extreme fluctuations during the outbreak, the growth in empty container traffic has hovered around 20% over the past few months compared with 2019.
After the detour, the transportation efficiency of the shipping company decreases.
From January to April 2024, container exports from the five major European ports totaled 6.1556 million TEU, an increase of 23.38% (4.9891 million TEU) over the same period last year, while container imports from the five major European ports totaled 6.478 million TEU, an increase of 15.2% (5.6229 million TEU) over the same period last year.
The average export time of container ships in Europe's five basic ports was 7.89 days, 1.46 days longer than the same period last year, and the average import time was 4.26 days, 0.25 days shorter than the same period last year.
At the same time, the number of ships arriving at the basic ports of Europe also showed a year-on-year decline. In terms of ship types, in the first four months, the number of 12000 + container ships arrived at the port decreased by 21.56% compared with the same period last year. The number of container ships arriving at the port of 10000 ~ 12000TEU decreased by 4.02% compared with the same period last year. The number of container ships arriving at the port of 5000TEU ~ 10000TEU decreased by 3.11% compared with the same period last year.
As a result, the efficiency of global collection and transportation has also declined. For example, the main transit ports (Singapore Port, Jebel Ali Port) congestion time prolonged, punctuality decline and so on began to appear.
In the first quarter of 2024, the average global container shipping schedule was 53.06%, down 5 percentage points from the same period last year; the global average number of delay days was 5.58 days, an increase of 0.35 days over the same period last year.
After the detour, the demand for containers per voyage is greatly increased.
After the epidemic spread in 2020, the demand for containers per voyage increased significantly. According to statistics, from May 2020 to June 2021, the average year-on-year growth of container demand per voyage on the US line is 2.5%.
As of June 2021, metal container production increased by 227 per cent compared with the same period last year.
Switch to the European line. Affected by the detour, the global container turnover efficiency decreases, and the phenomenon of lack of containers appears gradually. As of March 2024, metal container production increased by 156% compared with the same period last year.
2.2 method for determining the amount of containers held
The shortage of containers indicates that there are problems in the decision-making of container ownership of shipping companies.
The quantity of containers depends on the capacity of the fleet and the turnover of container equipment, and is affected by the utilization rate of shipping space, the structure of customer cargo and the balance of cargo flow on the route. At present, there are three quantitative methods to determine the quantity of containers: the determination method of container location ratio, the determination method of "fleet capacity + on-board, onshore turnover days", and the determination method of "fleet capacity + heavy container, empty container turnover days".
The latter two quantitative methods are more reliable, so we give examples to verify the latter two methods.
Determination method of "fleet capacity + onshore turnover days"
The idea of the method is as follows: assuming that the existing empty container scale basically meets the current fleet capacity scale and customer demand, considering the possible increase in future route capacity upgrading and transformation, and according to the proportion of route box types, calculate the average weekly incremental container allocation requirements for different box types, with reference to the number of empty containers on board and onshore turnover days, determine the number of containers of different container types, and finally determine the container retention.
Determination method of "fleet capacity + turnover days of heavy and empty containers"
On-board containers and onshore turnover containers may include heavy containers and empty containers. Since empty containers need to be equipped to meet the transport service needs of customers, it is necessary to distinguish between heavy containers and empty containers, otherwise the number of containers will be increased due to the low turnover rate of empty containers, resulting in deviation.
The main ideas of the determination method are as follows:
1) touch and arrange the route capacity upgrade or transformation plan, determine the current capacity and future capacity of each route, and calculate the weekly capacity change value.
2) download the route cargo flow table, calculate the average cargo volume ratio of different box types of the route, and then calculate the change value of sub-box capacity.
3) count the days of lifting containers, the days of staying empty containers, and calculate the allocation constant of shipping lines.
4) the amount of containers that should be increased or decreased is calculated according to the change value of split-box transport capacity and container distribution constant.
5) summing up the sum of the changes of container holdings in each route.
Can the market in 2021 be reproduced?
A: noHorizonblockchaingamesinc!
1 the supply and demand background of global collection and transportation
At the end of June 2022, global container ship capacity reached 25.702 million TEU, an increase of 6 per cent over the beginning of January 2021 and certainly more than 6 per cent compared with May 2020.
By the end of May 2024, the global container ship capacity had reached 29.669 million TEU, an increase of 5.6 per cent over the beginning of November 2023.
During the epidemic (2020.5-2022.5), affected by the decline in the operational efficiency of Meixi Port, the US-West route fell into a "paralyzed" state, and more shipping companies laid out their routes to the eastern United States. From the point of view of the route distance, both the Panama Canal and the Suez Canal have increased the voyage and duration of the American route. At the same time, in the case of limited port facilities in the East of the United States, the berthing time of ships has also been extended. Taking into account the above factors, global freight capacity fell by-1.08%, demand growth of 4.53%, supply less than demand, driving up the freight rate of the American line.
Driven by the supply chain crisis, other routes have also risen to varying degrees.
During the Red Sea attack (2023.12-2024.5), the ship bypassed the Cape of good Hope to increase the ship's voyage and duration. The waiting time of ships has also been extended in some transit ports. As a result, not only the European shipping capacity has been absorbed, but also the global gathering capacity has changed from oversupply to shortage. According to estimates by relevant institutions, the growth of global gathering capacity is only about 2%, and demand is growing by about 4.6% at this time.
Structural change of capacity growth of major shipping companies
Different alliance advantage routes are different. For example, the 2m alliance layout has more capacity on the European route, the maritime alliance has more capacity on the American line, and there is no obvious distinction between the European route and the American line of the THE alliance. Therefore, the increase in the capacity of shipping companies represented by Maersk and the Mediterranean means that the capacity of shipping companies represented by Cosco, Dafei, Hebrot and Changrong Shipping is also likely to increase, which means that the capacity of shipping companies represented by Cosco, Dafei, Hebrot and Changrong Shipping is also likely to increase.
At the same time, the increase of its own transport capacity means that the ability of shipping companies to regulate and control transport capacity is increasing. At present, the shipping companies with faster capacity growth include Maersk, Herberot, COSCO Shipping and ONE; with the exception of Herberot and ONE, other shipping companies have their own capacity on the rise.
Does it have any effect on blank flights and suspension rate?
Shipping company capacity control measures include the increase of blank flights or suspension of flights. (for the analysis of the US line, please refer to the article "how long can Container Freight rates go Crazy under the background of lack of cabins and boxes" released by the official account "Transportation Research Navigator")
2 comparison of objective conditions of cabin deficiency
We mentioned the impact of port congestion, ship delay and empty container turnover time on capacity in the article "how long can the freight rate go crazy under the drive of lack of cabins and boxes".
In this context, the import container volume of the ports of the United States, West and East is significantly higher than that of export containers. According to statistics, at the end of May 2022 (when freight rates peaked), the proportion was 122% higher.
Similarly, the current waiting time for imports and exports of basic ports in Europe has not reached its peak at the time of the epidemic, and there are only signs of extension in some ports. From the point of view of the import and export volume of the basic port in Europe, since the beginning of 2024, the export volume is 5.23% higher than the import volume. With the passage of time, since the beginning of April, the export carton volume is more than 12% higher than the import carton volume. This situation shows that the probability of the subsequent return voyage is also increasing.
3 comparison of objective conditions of lack of boxes
In 211122, the number of empty containers in US ports reached the highest level since 1994. At historic highs, the index of empty containers available in US ports is above 0.5. After the transfer of routes, the number of empty containers in the ports of the United States and the West has not increased any more, but it is still at an all-time high, while the number of empty containers in the ports of the East of the United States has continued to increase, such as New York Port and Savannah Port. This situation did not improve until after the third quarter of 2022.
At present, the waiting time for container exports at some of the basic ports in Europe is slowly lengthening, but the waiting time for imports is far less than that during the epidemic period. The more prominent port of Felixstow, affected by the prolonged departure time of ships, has significantly increased the number of empty containers stored in its port. Fortunately, its exports account for only about 4.2%, and the detention of empty containers will not have much impact for the time being. Therefore, in the future, we will focus on the detention of empty containers in the port of Rotterdam.
Will the European Line repeat the same mistake?
Answer: no.
Through the above analysis, after summarizing the objective conditions of lack of cabins and boxes, we believe that the current European line is not ready to get out of the historical market in 2021, and in the following month, the possibility of a big rise in the futures price of the Container Index (European line) is also small. as European ships return, the incentive for shipping companies to raise prices will gradually weaken, and the market will reverse at that time.
Strategy recommendation
Unilateral trend strategy: can be short
Based on the different pace of spot price increases, combined with shipping company freight quotations, there is still nearly 100 points of price increase for 2406 contracts at present, but we need to pay attention to the trading opportunities brought by the return of basis in the approaching delivery month.
The 2408 contract is a peak season contract, and the capital increment brought about by the early relocation of positions and the price increase of the shipping company in early June have already landed on the contract. Therefore, in the short term, the contract price faces an increased risk of high adjustment, of course, in the peak season expectations, the falling space is relatively limited.
2410 contracts are post-season contracts. Strictly speaking, the rate of increase is limited. The recent rapid price increase is mainly driven by the backward shift of expected market demand. Therefore, if it is expected to be a bubble, the contract will have a larger decline.
In addition, the unilateral trend trading of other forward contracts is limited by liquidity, and the uncertainty is large, so long and short is not strongly recommended.
Intertemporal arbitrage strategy
We have analyzed the fluctuation of the cross-month price spread of the US line during the epidemic, and the data show that the event shock will aggravate the volatility, but will not change the direction of the fluctuation. The same is true when applied to the European line. Therefore, respecting the objective operation law of things is the main logic of intertemporal transactions.
Figure 4.2.1: cross-month price difference of European freight rates
Unit:%, point
Source: Ningbo Shipping Exchange, South China Research
Figure 4.2.2: cross-month spread of European futures
Units: point
Source: Shanghai Futures Exchange, South China Research
N short more than 2406 and 2408 contracts
Logic: 2408 contract prices fall faster than 2406 contracts, 2408 contracts rise momentum exhaustion faster than 2406 contracts.
Admission interval: [- 300 Mill 100]
Target range: [0200]
Stop point: fall below the-300 point line
Risk point: the spot increase is less than expected, and 2406 of the contract returns to the market based on the basis.
N focus on the reverse of 2410 and 2412 contracts
Logic: 2412 contracts are expected to be ready before the Spring Festival; 2410 contracts have a higher risk premium; statistically, the chance of anti-hedging is high.
Admission interval: [400,500]
Target range: [- 90,200]
Stop loss point: break the 520-point line
Risk point: 2410 contract risk premium further expanded
Author: Fu Xiaoyan, South China Futures Shipping analyst Z0002675