The container liner achieved considerable profit in the second quarter. After the rapid increase in spot freight rates, the profitability of shipping companies is expected to reach a new high in the third quarter. Although the inventory filling in the third quarter eased the decline in container shipments in the second quarter, the second wave of the epidemic is likely to disrupt the fragile economic recovery and affect global port processing.
Reversal After the Big Crisis
Part of the container demand is renewal demand, and the other part is the new demand for containers, which is related to factors such as global trade volume, container shipping prosperity, and capacity deployment.
The container industry presents cyclical fluctuations. Taking 2012 as the watershed, it can be roughly divided into a growth period and a stable period. Since the 1990s, global manufacturing has shifted to China, and container manufacturing has shifted to China. It was a period of high economic growth in China between 2002 and 2011, and the global container industry was also in a growth period. In 2011, container output reached 3.26 million TEU. After 2012, affected by China's economic restructuring and the global economy, container demand has been in a period of shock. Except for some special years, such as the 911 incident in 2001, the financial crisis in 2009, and the overcapacity of the transportation industry in 2016, the container volume is generally stable. From 2012 to 2020, the average container output is 2.7 million TEU, in which the second year affected by special events usually has a larger rebound. In 2009, the global container sales volume was only 300,000 boxes, but it rebounded to 2.5 million TEU in 2010 and 3.26 million TEU in 2011. In 2016, the world was in the midst of sluggish economic growth and sluggish trade. The imbalance of supply and demand and the continued decline in freight rates caused the industry to fall into a loss-making situation for the entire industry. The volume of containers dropped to 2.1 million TEU in 2016, but the postponement of purchases will not decrease. In 2017 and 2018, the container output recovered to 3.4 and 4.08 million TEU.
The Sino-US trade frictions and health incidents in 2019 and 2020 will have a greater impact on the industry, which is expected that the output in 2020 may fall below 1 million TEU. After the first quarter of 2020, there are almost no orders for containers, so shipping companies are also cutting the capacity to survive, and the freight rate has dropped by 30% this year. It is expected that the growth rate of global container trade will drop to -8.5% in 2020. With the gradual resumption of work in Europe and the United States and lifting the ban, as well as factors such as higher-than-expected earnings in the shipping industry in the first half of the year and seasonal boom in the third quarter, customers' willingness to purchase boxes increased significantly in the second half of the year. According to the report from CCTV, the demand for containers has grown strongly after August. Leading container companies are now at full production and orders are scheduled to be scheduled before the Spring Festival next year. Due to the effective control of health incidents in China, the manufacturing industry has returned to China, coupled with the tight international trade capacity, container ship freight is high and the industry recovery has come ahead of schedule.
Container Demand Is Relatively Stable in the Long Run
Due to the large number of containers, the demand for renewal accounts for a relatively high proportion. As of the end of 2018, the global container holdings were 41.6 million TEUs, in which the annual renewal accounted for about 5% and the average annual renewal demand was 2 million TEUs. Compared with the average sales volume of 2.7 million TEUs in the past eight years, the renewal accounted for 74%. Of course, the company's willingness to update will also be affected by profitability.
The Epidemic Intensifies Tight Supply and Demand, And the Volume and Price of Containers Have Risen, Ushering in A Significant Recovery
Since the beginning of this year, China's imports and exports have been trending in a V shape, and the positive growth has been four consecutive months since June, the first time in the past two years. The trend of container throughput and import and export amounts is highly consistent. In September, China's container shipments were 230,000, an increase of 43.75% year-on-year, a strong rebound from August.
Prices have also been rising all the way. In September, China's container exports averaged US$3,803.75, an increase of more than 400 US dollars compared to March.
Industry Boom Is Good for Container Leaders
At present, the production capacity of the global container manufacturing industry is basically distributed in China. Among them, CIMC, Singamas, Universal Logistics, and CXIC are the four major groups, all of which occupy more than 90% of the container building market. In terms of market share, CIMC has a stable market share of more than 40% and has always ranked first in the industry; Singamas is second only to CIMC in terms of production capacity, with a market share of more than 20%, ranking second in the industry; Universal Logistics benefited from the huge internal container demand, with a market share of around 15%, ranking third in the industry; New Huachang Group has a market share of about 10%, ranking fourth in the industry.
A Stable Competitive Landscape in Mid- to Long-Term
In recent years, the concentration of the container shipping industry has reached a high level, and the risk of vicious competition has declined significantly. At the same time, the competition for large-scale container ships has come to an end, and the medium and long-term supply pressure is relatively low. It is predicted that the global economy is expected to achieve a full recovery in 2021, and the supply of container transportation will be at a historical low point. Next year, the growth rate of supply and demand for container transportation will reach more than 3%, and the industry's prosperity is expected to realize a significant improvement. In the long run, the competitive landscape of container transportation will continue to be optimized, leading enterprises will gradually extend to the high-value industrial chain, and profitability and operational stability will continue to increase.
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