Port Congestion Is Serious! Textile Enterprises Dare Not Take Orders

At present, port congestion in many places has intensified again, and more than 350 cargo ships around the world are queuing up for unloading. Some media said that the current repeated epidemic may make the global shipping system face the biggest crisis in 65 years.

Global port congestion is becoming more and more serious

Performance of A-share port shipping companies

According to foreign media reports, up to now, 353 container ships are queuing up outside ports around the world, more than twice the same period last year.

On the domestic side, after the outbreak of new crown pneumonia in Zhoushan port of Ningbo on August 11, Meishan port was closed. Vessels in Meishan port have been adjusted to other port areas. The number of container ships berthed in Xiamen, a coastal city in Southeast China, has increased from 6 at the beginning of this month to 24, and the domestic port congestion is also intensifying.

The analysis shows that during the epidemic period, countries strengthened border control, the traditional supply chain was affected, and people's online shopping demand increased significantly, resulting in a surge in sea freight volume, and ports were overwhelmed. In addition to the epidemic, the aging of global port infrastructure is also an important cause of cargo ship congestion. In this regard, Sinotrans maritime control said that the port automation reform will undoubtedly be a trend in the development of the industry, and for shipping companies, the implementation of digital reform can also improve the efficiency of port loading and unloading.

The serious congestion at sea ports has led to a surge of more than 10 times the price of some routes. In the view of industry insiders, the booming market of shipping industry will continue until the end of this year, while the market of next year still needs to be observed. Thanks to the booming shipping market, the performance of China's listed shipping companies in the first half of 2021 shows a substantial growth. Since August, the port shipping sector has risen by 4.31%. According to the analysis, the net profits of Yantian port, Bohai ferry and Changhang Fenghuang in the first half of the year increased by 49.99%, 9441.50% and 630% respectively; COSCO Haikong and Ningbo shipping are expected to increase their net profits by 3162.36% and 500% - 750% respectively in the first half of the year. According to CITIC, the super peak season of consolidation and transportation in the third quarter has been opened, the demand for shipping space is constantly rising, and the unilateral market pattern caused by the serious imbalance between supply and demand will continue, and the high-quality port has configuration value.

Global supply chain faces great threat

Port congestion is the core bottleneck of global supply chain disorder. According to statistics, since about 42% of the world's exports come from Asia, the chaos in the Asian market is likely to distort the global supply chain. Affected by the mutation of the new coronavirus "delta", many countries in Asia are facing a new wave of epidemic, causing paralysis of many factories and ports, and impacting the global supply chain.

Zhao Wei, chief economist of Kaiyuan securities, told Xinhua Finance and economics that the "threat" of shipping to the global supply chain comes from two aspects: on the one hand, the sustained high sea freight rates have pushed up the transportation costs of the global supply chain; Since May 2020, the global container freight index has increased by nearly four times; On the other hand, the shortage of transport capacity has limited the supply of Global trade. The shortage of shipping capacity is closely related to the shortage of shipping capacity, the serious shortage of new capacity, the "labor shortage" in several important ports and the decrease of seafarers.

Looking forward to the future, as the import demand of Europe and the United States remains high, the industry's newly added transport capacity is seriously insufficient, and the shortage of seafarers continues to exist. Superimposed on the high oil price, the shipping capacity may continue to be tense and the freight rate will be high.

Many domestic and foreign retailers said that due to the continuous supply chain disruption, they are facing the problem of inventory shortage. As the cost has increased, they are forced to pass on part of the cost to consumers.

Take Nike, for example, which has warned that Nike sports shoes made in Vietnam may face the risk of being out of stock. In the second quarter of 2021, 49% of Nike's seaborne imports to the United States came from Vietnam. Matt friend, Nike's chief financial officer, said the current consumer demand exceeded market supply and inventory levels were falling. The company forecasts that supply chain delays and high logistics costs will persist in fy2022. Adidas has warned that by the end of this year, supply chain constraints could cause sales losses of up to 500 million euros (about 3.8 billion yuan).

What is the status quo of China's traditional pillar industry textile industry?

For the increase in shipping prices, foreign trade enterprises can be said to be complaining. For example, the textile industry, one of the most influential industries, is not only able to bear the rising shipping price, but also faces the situation that the shipping space cannot be reserved due to the high price.

Luo Zhiheng, vice president and chief macro researcher of YueKai Securities Research Institute, pointed out in an interview that for foreign trade enterprises, as the most important mode of transportation in international trade, shipping prices continue to rise, reducing the profits of foreign trade enterprises. This year, it is difficult to get one box in the shipping market. As a result, it is difficult for enterprises to fulfill the contract on time and delay delivery, resulting in overstock of inventory and tight cash flow. Especially for textile enterprises, the gross profit rate of labor-intensive enterprises is low. At the same time, this year, they are faced with the triple pressure of rising shipping logistics, RMB exchange rate fluctuation and raw materials driven by bulk commodities. Therefore, it is easy to face the threat of "dare not take orders and export is not profitable".

Zhao Wei also stressed that the aftermarket of textile export depends on the influence of "substitution effect". For textile enterprises, the bargaining power in freight rate is weak, and its profitability is easily eroded by sea freight. Vietnam and other Southeast Asian countries have recovered their production capacity rapidly since this year, especially the textile output has exceeded the pre epidemic level; Under the capacity restoration, Vietnam's export growth was fast, and the compound growth rate of export in the first two years in July was 12.1%, which had exceeded the level before the epidemic. The capacity restoration and export share recovery of Vietnam and other production-oriented countries will lead to the attenuation of China's "substitution effect".

Dong Dengxin, director of the Institute of Finance and securities of Wuhan University of science and technology, said that at present, China's textile and clothing export markets are concentrated in the European, American and Japanese markets. With the increase of vaccination rates and the normalization of group immunity in these countries, the import of textile epidemic prevention products has decreased significantly. With the gradual normalization of global epidemic prevention and control, the trade demand of epidemic related goods is weakening, and many manufacturing countries restart production, which will impact the domestic textile industry.

The head of a textile enterprise told Xinhua Finance and economics that the continuous high freight rate is alarming. The global ports are congested, the positions are short, the transportation capacity is declining, the goods can not be sent out, the balance cannot be returned, the factory is out of stock, and the funds are continuously occupied... It seems that the global fragile supply chain can collapse at any time, and enterprises must start to switch from export to domestic sales if they want to survive. In addition, he said frankly, abnormal congestion at the port, orders from time to time "broken", will seriously hit the market confidence in the future textile market.