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   Today's topic is "When will the" spring "of the foreign trade/shipping market come?"

   Under the contraction of foreign trade, the phenomenon of empty container accumulation at the dock continues.

   Recently, on the dock of Yangshan deep-water Port in Shanghai, containers of different colors were neatly stacked into six or seven high layers, and pieces of empty boxes piled up became the scenery along the way.

    A truck driver is cutting vegetables and cooking behind an empty trailer, in front of a queue of trucks waiting for goods. On the way down from the Donghai Bridge to the dock, there are more empty trucks "visible to the naked eye" than trucks loaded with containers.

     As the world's largest container port, Shanghai Yangshan deep water Port is quite representative of empty container accumulation.

     Compared with the decline in foreign trade, the problem of oversupply of shipping capacity, which continues to intensify due to the delivery cycle, has made the shipping market face a greater test.

     Reasons for the accumulation of empty containers

     If the accumulation of empty boxes during the Spring Festival this year is mainly affected by seasonality, then the current accumulation of empty boxes is a comprehensive superposition of diversified factors.

    The downturn in foreign trade is undoubtedly a major background, which makes the industry's original expectations for the recovery of market demand after the opening of the epidemic "disappointed".

    Customs data showed that in June this year, the total value of imports and exports reached 500.02 billion US dollars, down 0.3 percent from the previous month and 10.1 percent from the same period last year.

     Among them, the total export value was 285.32 billion US dollars, an increase of 0.5% quarter-on-quarter, down 12.4% year-on-year; The value of imports was US $214.7 billion, down 1.3% from the previous month and 6.8% from the same period last year.

     In dollar terms, imports and exports fell 4.7 per cent year-on-year in the first half of this year, while exports fell 3.2 per cent and imports fell 6.7 per cent.

    Recently, according to Li Xinggan, director of the Department of Foreign Trade of the Ministry of Commerce, the recent decline in China's import and export growth is a direct response to the weak recovery of the world economy in the field of trade. The first is sustained weakness in overall external demand.

Major developed countries are still adopting tightening policies in response to high inflation, and some emerging markets have experienced sharp exchange rate fluctuations and insufficient foreign exchange reserves, which have significantly curtailed import demand.

   Second, the electronic information industry is also in a cyclical downturn. In addition, the import and export base increased significantly in the same period last year, while import and export prices are also falling.

   The trade slowdown is a common challenge faced by all economies, and the difficulties are more global.

     In fact, the phenomenon of empty container accumulation is not only found in China's docks.

     According to Container trading platform Container xChange data, since the beginning of this year, the 40-foot container CAx (container availability index) of the port of Shanghai has remained at about 0.64, and the ports of Los Angeles, Singapore, Hamburg and other ports are even above 0.7 or 0.8.

     When the value of CAx is greater than 0.5, it means that there is a surplus of containers, and long-term excess will produce accumulation.

      The effect of empty container accumulation:

      The oversupply situation in the shipping industry is also set to intensify in the next few years, meaning that the demand-boosting effect of the expected modest pick-up in trade demand in the next year or so will also be diluted by the supply growth, keeping the industry's profitability low for a long time.

      In the short term, previously signed long-term contracts have allowed the ship's profits to decline relatively slowly this year.

For China's international logistics and freight forwarding enterprises, the market contraction brought about by the industry volume, directly triggered a sharp decline in profits.

"We are basically cutting prices to grab orders. Our prices have been reduced to the minimum, and so have our profits." An international trucking company in Zhejiang province says its profit margin is about 60% lower than before.

When will it get better?

     The annual regular foreign trade peak season is coming, when can the market improve?

Looking forward to the third quarter of this year, according to Zhou Dequan, director of the China Shipping climate index compilation Office, all types of shipping enterprises in this quarter, their prosperity and confidence index will pick up slightly.

     However, due to the oversupply of the transportation market and the impact of carbon emission reduction requirements, the future market will continue to be under pressure, for the future industry recovery prospects, and the third quarter of the traditional peak season can arrive as scheduled, China's shipping entrepreneurs are slightly less confident, more cautious.

     The person in charge of the above-mentioned Zhejiang international freight enterprises said that for them, the peak season generally began at the end of August and the beginning of September, and the business volume is expected to pick up in the second half of the year, but the profit margin will continue to be low.

     Chen Yang admitted that at present, the industry is quite confused about the future freight rate trend, "all feel that the uncertainty is too big." Even the recent slight rebound in freight rates does not mean that the market is starting to recover. At present, we do not see any significant recovery momentum on the demand side.

      However, starting from July, freight rates have risen slightly, China's supply chain also has great resilience, with more and more Chinese enterprises "going out", it is estimated that the overall market will recover in the second half of the year.

 See you next time~