Behind the continuous surge in ocean freight rates, major economies such as the United States and Europe have emerged from the epidemic and demand continues to be repaired. At the same time, global ocean shipping capacity "is in short supply."

Since May 2020, the global manufacturing PMI index, which reflects the global economy and trade prosperity, has rebounded sharply from a low of 39.6% to 56%. Since the second half of 2020, global container shipping capacity has only rebounded from 2.6% to 4% year-on-year, completely "not keeping up" with the pace of demand restoration.

The "supply in short supply" of global shipping capacity stems from the fact that the shipping vessels in the sea are already operating at full capacity, while new vessels are being added and the capacity is severely insufficient.

Since the second half of 2020, with the substantial expansion of container shipping demand, the idle rate of global container shipping capacity has dropped from a previous high of 11.4% to a historical low of 4.7%. The shortage of shipping capacity has also directly led to the global dismantling rate of shipping vessels dropping to around 0%. While the shipping capacity is approaching "full capacity", new ships and capacity are very limited.

The data shows that in 2020, the global shipping capacity will actually add 860,000 TEUs, which is only 3.6% of the existing shipping capacity, and cannot meet the demand for shipping.

The emergence of "labor shortages" in many ports in the United States and Europe, and repeated epidemics that have led to significant reductions in the number of seafarers have further dragged down the release of global shipping capacity and pushed up freight rates.

In addition to the shortage of ships, many core ports in economies such as the United States and Europe have experienced a "labor shortage" and their operating efficiency has fallen sharply. At the same time, the sharp rebound of the epidemics in India and the Philippines has caused many countries to refuse the entry of ships carrying Indian and Philippine seafarers. The combined number of seafarers in the latter two accounted for more than one-third of the world's total.

The "labor shortage" of ports and the decrease of Indian and Filipino seafarers have further aggravated the contradiction between supply and demand in the shipping industry and pushed up freight rates.

Interpretation direction of ocean freight rate

1. With the large-scale promotion of vaccines, the acceleration of enterprise production and capital expenditures and other repairs, the import demand of major economies such as the United States and Europe will remain high.

2. The 10-year “supply-side reform” and the superposition of the delivery cycle of new ships require at least 2 years, which severely restricts the “capacity” flexibility of this round of global shipping capacity.

3. In addition, due to the long training period and the reduced job attractiveness caused by the epidemic, the shortage of seafarers will further restrict the release of shipping capacity.

4. The trend of oil prices has risen sharply, which has also greatly increased the pressure on shipping prices from the cost side.

On the whole, with the difficulty of effectively alleviating the contradiction between supply and demand in the maritime industry and the surge in oil prices, supporting the high level of freight rates, major economies such as the United States and Europe will continue to face inflationary pressures.