Jeremy Nixon, CEO of Ocean Network Express (ONE), said in an online briefing about the market: "So I think we're still optimistic in general, but of course, we inevitably expect that in certain cycles and in the past There will be some headwinds in the current cycle of 2022, and we may see an uptick in container services in 2022 due to issues like energy costs and inflation, and possibly a slight shift towards a more balanced service consumption economy (in terms of purchases). Overall demand has slowed."
However, he also noted that container ports are still heavily congested and even if demand slows, it will take a while for the system to work.
Like its peers in the container shipping industry, ONE has experienced a dramatic shift in profitability, from a loss of US$586 million in its first year of operation ended March 31, 2018, to a loss of $586 million in fiscal 2018 to March 31, 2022 Estimated earnings for fiscal 2021 are $15.4 billion. Between January 2021 and December 2021, ONE reported EBIT of $13.9 billion on revenue of $26.4 billion, with an EBIT margin of 53%, compared with the average profit of the eight peer companies that reported results The rate is 40%.
While there has been some decline in the container spot market in the first half of the year, ONE has seen customers sign long-term contracts at prices close to or even higher than the current spot market in negotiations at the end of the year. "Freight rates on these contracts have gone up so significantly that customers have locked in a year or more close to the spot market, even higher than the current spot market, so that's a positive sign," Nixon said.
For ONE, its entire cargo is in the form of long-term contracts, he said.
In terms of spot freight rates, the decline since the Spring Festival has not been as dramatic as it has traditionally been seen during this period, he said. "We've seen a slight decline since February, but I would say that the level of decline is relatively in comparison to the past five years after Chinese New Year actually showing that it's a positive development not as much as we've seen. Then there was a significant decline in previous years."
Coupled with the epidemic and the Russian-Ukrainian war, which affected about 2.5% of the Asia-Europe trading volume, Nixon said that the sharp drop in spot freight rates was to be expected, but they did not see this happening.
Nixon also pointed to the potential impact of labor negotiations at U.S. West Coast ports, where current contracts expire in June. He noted that feedback from the industry is that these negotiations may not be easy to resolve. Therefore, we may see lower port productivity or delays in negotiations during June, July and August. "
ONE expects a certain level of normalization in the market in the second half of 2022, but this may be affected by labor negotiations on the U.S. West Coast and China's control of the new crown epidemic.
Judah Levine, head of research at Freightos, said depending on the current level of supply chain disruption, it could be enough to push transpacific freight rates higher again.
Drewry's freight rate trend analysis on March 24 is as follows
The composite index fell 4.1% for the week, but was still 74% higher than a year ago.
The WCI average composite index assessed so far this year is $9,285 per 40ft container, which is $6,130 higher than the five-year average of $3,156 per 40ft container.
The Drewry World Container Index Composite fell 4.1% to $8,470.45 per 40-foot container, but was 74% higher than the same period in 2021. Shanghai-Rotterdam rates fell 8% or $1,029 to $11,192 per 40-foot box. Shanghai-Genoa spot freight fell 3% or $418 to $12,201 per FEU. Likewise, Shanghai-Los Angeles and Rotterdam-Shanghai FAK rates fell 2% to $9,926 and $1,490 per 40 feet, respectively. However, the Rotterdam-New York rate rose by 5% or $302 to $6,793 per FEU. Prices in Los Angeles-Shanghai, Shanghai-New York and New York-Rotterdam are hovering around the levels of previous weeks. Drewry expects spot rates to remain steady in the coming week.
Maersk
●Adjusted inland surcharge for all dry and reefer containers, applicable to FMC Countries from April 8, 2022, and NON-FMC Countries from April 1, 2022 to South African countries.
●From April 1, 2022, the surcharge for all import, export, bonded, transit, transshipment goods in and out of Ho Chi Minh City will be updated. The new regulations cover all goods entering and leaving Cambodia through the Ho Chi Minh City seaport.
Contanier xChange said freight rates could rise in the coming months as the industry approaches pre-peak season.
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Source: This article integrates foreign media and shipping company news
