In the past six months, the global shipping price has continued to fall from its high level. Although it is still several times higher than before the epidemic, it has dropped by nearly half from the previous high.
Financial reports released by a number of shipping companies show that the industry's performance in the first six months is still generally bright. However, from the perspective of the capital market, the share price of the sector has fallen significantly from the previous high. Shares of Evergreen and Yang Ming, two major shipping giants in Taiwan, fell more than 50% from their 52-week highs.
Behind the decline in shipping prices are changes in the global supply and demand conditions. On the one hand, the chaotic state of port operations has eased, and ship carrying efficiency has improved; on the other hand, affected by inflation, international trade expectations have weakened. Compared with the drop in shipping prices, many foreign trade companies are more worried about "finding orders" .
Looking forward to the next two years, many industry insiders are pessimistic about the trend of freight rates due to factors such as the expected increase in the global economic recession and the sharp increase in the launching capacity of new ships.
The performance of the shipping company is still bright, but the stock price has retreated significantly
It is worth noting that the towering freight rates in the first half of the year have loosened, but because they are still running at a high level, the performance forecasts of shipping giants are still bright.
Recently, a number of shipping companies have released financial performance forecasts, and the performance has generally maintained growth. COSCO SHIPPING Holdings is expected to achieve a net profit of about 64.716 billion yuan in the first half of the year, a year-on-year increase of about 74.45%; China Merchants Steamship is expected to make a profit of 2.74 billion yuan to 3.028 billion yuan in the first half of the year, a year-on-year increase of 95% to 116%. In Taiwan, China, the cumulative revenue of Evergreen Shipping in the first half of the year reached NT$345.833 billion, a year-on-year increase of 82.09%, the best performance in history; Yang Ming Shipping’s revenue in the first half of the year was NT$216.151 billion, a year-on-year increase of 59.4% %.
Regarding the operating conditions in the first half of the year, China Merchants Shipping said that in the first half of the year, the dry bulk and container shipping markets remained relatively high despite the impact of the new crown epidemic, the Russian-Ukrainian war and the US dollar interest rate hike. The company's dry bulk fleet market judgment is accurate, the layout is reasonable, the operation is excellent, the profit contribution has increased significantly, and the performance outperformed the market index; the container market in the Asian region fluctuated at a high level. continued to rise sharply.
However, behind the financial report, there is a "hidden worry" in the shipping industry, and the stock price of the shipping company has retreated sharply from the high point. The Hong Kong shareholder Fang Overseas International reported that in the first half of the year, the company's total revenue increased by 61%, but the total cargo capacity decreased by 7.4% compared with the same period last year; the carrying capacity decreased by 6.3%, and the overall load factor decreased by 1.1% compared with the same period in 2021.
In terms of the capital market, the reporter found that the stock prices of listed shipping companies have shown a downward trend for most of the past six months. The decline of Yang Ming Shipping and Evergreen Shipping has receded by more than 50% from the 52-week point.
The industry says that freight rates are supported in the short term, but the outlook is weak
Regarding the future trend of freight rates, many industry insiders said that since the third quarter is the peak period for foreign trade shipments, the freight rate index will be partially supported. However, considering that the global economic recession is expected to increase, and the operation efficiency of ships is improved, and new ships will be launched intensively in the next two years, there is a risk that it is difficult to maintain high freight rates in the shipping industry in the medium and long term.
"August to October in the second half of the year is the peak period for shipments in the foreign trade market. The overall shipping market may be better than the first half of the year, but the increase should not be very large." Chen Zhen said in an interview with the Securities Times that in inflation In the case of high levels, the Federal Reserve will tighten monetary policy, the European Central Bank will likely follow up, and the European and American economies will be under great downward pressure. If the unemployment rate rises, the actual disposable income of residents will decline, which will further affect consumer confidence and demand. reduce.
Maersk CEO Shi Suoren pointed out in June that after two years of bull market, there may be a long whip effect of shrinking demand and increasing supply in the next few months, and the container economy may reverse as soon as August.
In the long run, the more severe test is the increase of a large number of new ships launched. The "Container Census and Leasing Annual Review and Forecast 2022/23" report released by shipping consultancy Drewry on the 13th of this month pointed out that in 2021, the number of global containers will increase by 13% to nearly 50 million TEUs, which is the previous growth trend. Three times the current global container surplus is estimated at around 6 million TEUs.
John Fossey, head of research at Drewry Container Equipment, said that the global new ship delivery momentum remains strong, and the space capacity is expected to increase by 3.6 million TEUs in 2023 and more than 3.9 million TEUs in 2024.
"The market may have been overconfident in the industry earlier." Zhong Zhechao believes that when the new ships are not launched, shipping companies have already started to increase the suspension of sailings, but the effect of preventing the decline of freight rates is very small. If new ships are launched in a concentrated manner in the next two or three years, there will be too much new capacity in the market, which may be the biggest test for the industry, and the consequences can be imagined.
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