Worse from the recent Suez Canal congestion, according to the world’s largest container producer, is that global demand for containers has risen to a record high this year, pushing freight prices higher.
Mr. Mai Boliang - CEO of China International Marine Containers (CIMC) - said that during the pandemic, the price of 20 feet dry container (TEU) doubled from a year earlier to $ 3,500. It is expected that from now until the end of the year, the price will not decrease much due to high demand and high production cost of container production.
"We have enough orders for the first half of 2021. It is expected that container demand will hit a record this year. The recent congestion in the Suez Canal could exacerbate the shortage of containers during the period. long time, "said Mr. Mai.
The Suez Canal - the major waterway of global trade connecting the Mediterranean and the Red Sea - has resumed since March 30 after nearly a week of congestion caused by a super-heavy container ship. shallow.
However, it can take several days or weeks to circulate all of the hundreds of ships that are stranded here. Analysts fear this delay could slow the handling of empty containers at ports and worsen the shortage of containers.
Lately, shipping costs have not decreased much as logistical barriers remain. According to the Freightos Baltic Index, freight from China to the East and West coasts of the US reached $ 5,735 and $ 4,909 for each container larger than 40 feet, respectively. Meanwhile, the freight to Northern Europe via the Suez Canal is $ 7,485 for the same container.
Shenzhen-based CIMC - a supplier of about half a container worldwide - has been operating at full capacity since the end of last year as China and other Asian countries increased their merchandise exports. to the US and Europe, leading to a shortage of containers.
According to Mai, about 98% of the world’s containers are made in China. In particular, CIMC currently operates 20 container production lines with a capacity of about 220,000 TEUs per month, accounting for nearly half of the total capacity of the industry.
Last year, CIMC’s net profit doubled from a year earlier to 5.3 billion yuan ($ 806 million), mainly thanks to its container business, which accounts for about 23% of revenue. this business.
Last year, CIMC’s container revenue reached more than 1.9 billion yuan, up 13 times from a year earlier thanks to both soaring volumes and container prices. Generally in 2020, CIMC sold more than 1 million TEU, up 12% from a year earlier, while costs increased 40%.
In addition to increasing global demand, Mr. Mai said that the high rise in container prices was also due to rising steel prices.
Steel prices rose partly due to the country’s infrastructure boom, data from the China Iron and Steel association showed. Steel product prices in China have risen rapidly since the beginning of last year.
"It is difficult to reduce container prices this year, because we still believe that the high demand for containers will not cool down until next September," Mai said.
