Tensions in the Red Sea region cause longer container return times. Experts believe that if this situation lasts, the shortage of containers will return.
Shipping will lack empty containers if Red Sea tensions persist
Shipping activities around the world are increasingly “hot” due to escalating tensions in the Red Sea region, after Houthi forces attacked commercial ships.
Cargo ships are forced to avoid the Suez Canal and go around the Cape of Good Hope, adding 8 to 21 days to shipping routes connecting Asia and the Middle East to Europe, while costs also increase. .
Many people are starting to worry that the “nightmare” of lacking empty containers that happened in 2020 – 2021 is returning. Because, if the ship’s travel time is longer, it means the container return time will also be longer.
Mr. Nguyen Hoang Giang, Head of Stock Analysis Department, in charge of the Transportation industry group of the Center for Analysis and Investment Consulting of SSI Securities Company, said that container turnover is getting longer.
Mr. Giang compared the chain of transporting goods by sea to a clock cycle. Normally, containers of fleets can take 1-3 months to complete a circle, that is, from point to point export to the import point, then back. But if that cycle lasts 1/3 more, there will be an imbalance in containers and the supply chain. The fact that shipping lines take more time to move (due to having to make detours) will be the factor that prolongs container turnover.
Sharing with us on the sidelines of the press conference of the Ministry of Industry and Trade on the afternoon of January 18, Mr. Tran Thanh Hai, Deputy Director of the Export Department import (Ministry of Industry and Trade) also expressed concern about this issue.
“If tensions in the Red Sea region persist, there will be a risk of a shortage of empty containers. Currently, this situation is just starting to happen. Besides, the amount of goods going from Asia to Europe is quite large, so there are still empty containers. Therefore, there has not been a temporary shortage of empty container supply,” Mr. Hai said.
According to Reuters, world commodity traders believe that at the present time, the number of available containers in the world still meets demand and has not been affected like what happened during the COVID-19 pandemic. 19. However, they believe the risks are still there.
Container shipping rates have continuously increased for a month now because shipping lines have to bear many costs. The world container freight index as of January 11 was at 3,072 USD/FEU (40-foot container), double the level a month ago. In particular, the freight from Shanghai to Rotterdam port (Netherlands) is more than 2.5 times higher.
Global container ship freight index over the past year (Unit: USD/FEU, source: MacroMicro)
“If Red Sea tensions persist, international container shipping rates in the second and third quarters may continue to increase sharply from the current low rates, and will change the picture of the global container shipping industry. in 2024 in a more positive direction than previous forecasts,” said Mr. Nguyen Hoang Giang.
Container market liquidity is improving
Red Sea tensions pose risks for export businesses. But from a more positive perspective, this is positive information for the container market – which has bottomed out after the sublimation period of 2021 – 2022.
Mr. Tran Thanh Hai said that for container manufacturing businesses, this is an opportunity. But in Vietnam, only Hoa Phat produces container shells, the rest China currently accounts for 90% of the world’s market share.
Sharing with us, Mr. Nguyen Manh Tuan – Vice Chairman of Hoa Phat Group, expected liquidity to improve as shipping lines’ empty container return time becomes longer.
“What we care about is liquidity and this will be the beginning of the recovery cycle for the container market, after bottoming out in 2023. We expect the market to start to gradually improve from mid or late 2024 When market liquidity improves, container prices will also increase and the container manufacturing industry will also become brighter,” Mr. Tuan shared.
According to him, although the event in the Red Sea did not help container prices increase much, it had a positive impact on liquidity.
“In the last few weeks, there have been customers asking to buy containers. Some carriers that still load internationally have also paid more attention. A number of large transportation companies have come to Hoa Phat to survey and begin to be interested in small orders,” said the group’s leader.
However, the event in the Red Sea is said to only have a short-term impact, not the main driving force in the near future.
“Tensions in the Red Sea will only have a short-term impact on the container market, unless a conflict occurs on a very large scale in the Middle East. Currently, the trade flow is not in a serious shortage of empty containers,” said Mr. Nguyen Viet Thang, General Director of Hoa Phat.
Hoa Phat’s container factory started construction in June 2021 – a time when the world was thirsty for empty containers due to the COVID-19 epidemic, causing the world’s supply chain to be broken. Hoa Phat container factory has a total capacity of 500,000 TEU/year, focusing on 20 and 40 foot general cargo container products. Phase 1 with capacity of 200,000 TEU/year has been completed and put into operation.
However, the time Hoa Phat released its first batch of containers was also when the market hit bottom due to oversupply.
The company delivered the first order of 100 20-foot containers in August 2023 and then a few orders for Hang Hai Corporation, Vinafco, New Way Lines, Vietsun, Topaz Marine, Vsico……According to share According to the group’s leaders, container consumption last year was still small and “insignificant”.
According to VietnamBiz.vn
