The global shipping industry, which has encountered unprecedented difficulties, may usher in the dawn.

Maritime regulators from China, the United States and the European Union held a global shipping regulatory summit, according to the official website of the Federal Maritime Commission (FMC). According to reports, the meeting discussed a number of issues of great concern:

1. After the outbreak of COVID-19, it analyzed the demand and supply related to international shipping, the difficulties faced by the current shipping industry, and the reasons why the shipping industry was affected.

2. To date, the actions taken by the relevant jurisdictions and regulatory authorities in response to the aforementioned events and their results.

3. What measures may be taken in the future to get the shipping industry back on track.

DanielMaffei, chairman of FMC, said: the unusually high operation of shipping prices and container prices has aroused widespread concern among regulators, legislators and the public around the world.

It is worth noting that on September 9, France's CMACGM, the world's third largest shipping company, issued a major official statement on the 9th, saying it would freeze futures counter rates until February 1, 2022. Dafei said that in the face of an unprecedented situation in the shipping industry, the company put its long-term relationship with its customers in a more important position.

Regulatory agencies, shipping companies "freeze prices", high shipping prices are expected to usher in an inflection point?

Major global maritime regulatory agencies focus on "sky-high" sea freight

On September 8th, at the multilateral forum of the Fifth Global Regulatory Summit, DanielB.Maffei, chairman of the Federal Maritime Commission of the United States, and representatives from the European Union and China discussed current issues related to international transportation.

DanielMaffei believes that global regulators, legislatures and the public are concerned about the record demand faced by sea carriers and the sharply rising cost of shipping containers by sea. The global regulatory summit provides an opportunity for agencies responsible for regulating container transport to discuss the information observed by their respective regulatory and law enforcement systems in the market. and how to deal with the price adjustment of container carriers.

DanielMaffei expressed his appreciation to the European Union for convening the meeting and provided a forum for the valuable exchange of information. The delegation agreed to hold the next global regulatory summit in Beijing in 2023.

The EU was represented by HenrikM ø rch, Director of Transport, Postal and other Services of the General Administration of Competition. China was represented by Li Tianbi, Director of the Waterway Bureau of the Ministry of Transport. Committee members Rebecca F Day, Michael A. Curry and Carl W. Benzel also represented FMC at the summit.

The world's third largest shipping company announces that freight prices will be frozen until February next year.

In addition to regulators, shipping companies are also trying to stabilize freight rates.

A few days ago, France's Dafei Shipping, the world's third largest shipping company, unexpectedly issued an official statement that it would freeze futures counter rates until February 1, 2022.

Dafei said that in the face of an unprecedented situation in the shipping industry, the company put its long-term relationship with its customers in a more important position. Due to the port congestion and the serious imbalance between the demand and the effective capacity of marine containers since 2021, the spot freight rate of container transport has continued to rise.

"although these market-driven rates are expected to continue to rise in the coming months, the Group has decided to suspend further price increases for all services under its brand." According to the company, the fleet has increased its capacity by 11% through the purchase of new and second-hand ships since the end of December 2019, and the fleet's container capacity has increased by 780000 TEUs in the past 15 months.

Beware, the exuberant external demand has shown a high slowing trend.

Does the sky-high shipping fee mean that the export demand is strong?

Chang ran, a senior researcher at Citic Investment Research Institute, said that the economy of overseas manufacturing is divided, and the role of external demand is weakening.

In Chang ran's view, there are three main manifestations of the weakening role of external demand.

First, the overall external demand of the world slows down. The global comprehensive PMI decreased from 58.5 in May to 55.7 in July, and the global manufacturing PMI decreased from 59.6 in May to 56.3 in July.

Second, the European Union and the United States, as China's main overseas demand side, are showing a high slowdown. Among them, the euro zone manufacturing PMI dropped from 63.1 in May to 62.8 in July. The US manufacturing PMI dropped from 61.2 in May to 59.5 in July.

Third, the external demand of Japan, South Korea and ASEAN is not good. Japan's manufacturing PMI entered a downward range in April, while South Korea's manufacturing PMI fell from 56.3 in February to 53.0 in July. ASEAN's overall manufacturing PMI index reached 44.6 in July, a 13-month low.

Chang ran said that as China's main emerging market export region, ASEAN and China's exports depend on each other and promote each other. ASEAN is not only the main driving force of China's overseas demand, but also the source of complementary trade supply within the industry. the poor economic performance of ASEAN's manufacturing industry as a whole will further shrink the commodity demand in China's upper and middle reaches of the industrial chain and slow down the export momentum.

Chang ran believes that the boom in the surge in shipping prices shows, to some extent, the current not-so-weak external demand, but the trend of shrinking external demand and slowing export momentum is clear. At present, the logic of the prosperous shipping phenomenon is not that the increase in export demand is greater than the increase in shipping prices caused by the elasticity of supply, but the drag on exports caused by the lack of shipping capacity caused by the global epidemic.

However, with regard to the trend of the follow-up freight rate, most market analysts still think that it will operate at a high level and even continue to reach a new high.

Chang ran said that shipping bottlenecks reflected in the surge in shipping prices remained in the second half of the year. Drury's annual review and forecast of global container terminal operators pointed out that the operating capacity of global container ports will maintain an average annual growth rate of 2.5% in the next five years, but global demand will maintain an average annual growth rate of 5% in the same period. The recovery and growth cycle of the shipping industry is 2-3 years. Thus it can be seen that the operating capacity of containers, ships and ports will be tight for at least three years, and the shortage of global shipping capacity will persist.

Haitong International also pointed out that under the support of the fundamentals of supply and demand, the short-term freight rate upward still has a strong resilience, and the freight rate is expected to continue to exceed expectations; the time point when the freight rate enters a stable period still needs to be observed, and the market may need to revise expectations.

The open source securities macro research team pointed out that the global hub of container capacity growth has fallen sharply over the past decade as the industry has been depressed and major container companies have cut back on capital spending on a large scale. While the existing capacity is insufficient, the new ship delivery cycle of at least 2 years makes the capacity of the collection and transportation industry almost inflexible in the next 2 years. Due to the long training cycle and the decline in job attractiveness caused by the superimposed epidemic, the shortage of seafarers will further limit the release of maritime transport capacity. Experience shows that training and internship for ordinary seafarers and senior seafarers takes at least 10 months and 2 years respectively. As the epidemic has led to the loss of some seafarers, and the frequent variation of the virus has greatly reduced the attractiveness of seafarers' work, the global wastage rate of seafarers, especially senior seafarers, remains high, and the gap continues to expand.

On the whole, with the large-scale promotion of vaccines, the high import demand from the United States and Europe, the serious shortage of new transport capacity in the industry, the continuous expansion of the seafarers' gap, and the trend of rising superimposed oil prices, seaborne freight rates may remain high. Open source securities macro research team said.