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09 February 2021
Intermodal Asia: The COVID-19 pandemic, which began in 2020, was an unpredictable event for everyone. What has been the impact of this epidemic on your company and the container shipping industry?
WNG：At the beginning of 2020, a sudden outbreak of COVID-19 spread rapidly around the world, bringing significant threats to people's lives. But also, causing huge losses to international trade and economic development. Shipping lines and companies engaged in domestic and international trade were deeply affected. According to statistics, about 90% of the cargo in international trade is transported by sea. The industry faces ongoing risks and challenges, such as: failure to deliver cargo, escalating port control measures, demand reduction, ships at anchor, operation costs rising, and increasing risks of contract violations, etc.
China's shipping market has been in short supply of vessel space and containers since the latter half of 2020, causing container prices to soar. Up to now, freight to the US has risen dramatically, and even second-hand container unit prices have showed exponential growth. Chinese container manufacturers are telling us that current orders have been booked for the second quarter of 2021. Since November last year, the shortage of containers has intensified, along with other problems such as delays to shipping dates and port cancellations. However, the situation for European exporters is arguably worse. According to reports, they will not be able to secure reservations to Asia at any price until January.
There have been three major impacts from COVID:
1. Scarcity of containers
Due to the re-outbreak of the epidemic in Europe, many countries have re-entered lockdowns, which has directly affected people's daily work and home lifes, leading to containers being stuck in various major ports. Since the epidemic, there has been an imbalance of global trade, with China suffering from a severe shortage of container transport. This has been compounded by fully loaded containers leaving China and failing to return. We have made use of our diversified resources and global container inventory and intermodal transportation to ensure we meet the demands of customers.
2. Orders surge during the export peak season
China's exports have grown at the fastest pace in nearly three years!. This is because of the world’s strong demand for goods, including PPE, leaving the world's second-largest economy with a record level of trade surplus. In a short period, China became the center of the world factory.We believe that China's export growth may last for a couple more months due to the worsening of the epidemic situation overseas. In addition, because of the arrival of Christmas, many European and American customers began to stock up. Since last September, the proportion of exports has soared, resulting in a large number of containers being piled up abroad and a general shortage of containers in China. Orders from some Southeast Asian countries have also been diverted to China - which has increased China's share of global exports. Facing the export peak season and the serious shortage of containers, WNG has been striving to to protect the supply of containers for global customers.
3. Shipping costs skyrocket
Since the outbreak of the epidemic, at the beginning of the 2020, there has been a serious shortage of containers while demand has steadily reached record levels. The cost of shipping containers from China to the East Coast of the United States reached record hghs in mid-November, increasing by 42 percent from July. Meanwhile, the cost of shipping from China to the West Coast of the United States has increased by 50 percent. Back in the early period of the epidemic, the global shipping market was bleak and there was almost no cargo available. Many shipping companies experienced significant losses.
Container shortages, congestion and rising freight rates will continue for a long time to come, with the container shortages in Asia pushing up shipping costs.
Intermodal Asia: Entrepreneurs at the forefront of the industry are always able to dispel the clouds to see the sun and explore business opportunities for their companies. How has your company innovated to cope with the changes brought by the epidemic?
WNG: The China Container Industry Association said at the end of last year that since July, a surge of China’s exports and low turnover rates of foreign containers had triggered an increase in demand for Chinese containers. Chinese container manufacturers have been rolling up their sleeves and producing 300,000 20-foot equivalent units per month since September.
In the face of the special situation brought by the epidemic, the phenomenon of container shortage at ports will continue. WNG Container is exploring the container intermodal transport through railway and port connections, which is believed to be more cost-effective, safer and more environmentally friendly. At the same time, we also need to pay attention to the relevant information about exports.
Intermodal Asia: Our 2021 exhibition will be held in Shanghai in July this year. What are your expectations?
WNG: WNG participated in Intermodal Asia for the first time in 2019 and gained valuable industry insights and analysis. The exhibition also built a bridge for us to communicate closely with customers, suppliers and manufacturers from around the world. Due to the global outbreak of the COVID-19 epidemic in 2020, Intermodal Asia 2020 was hosted online, facilitating a communication platform for the industry, ensuring that we kept up to date with the latest global industry trends.
As one of the world's most influential exhibitions in container intermodal transport and shipping, Intermodal Asia will return to Shanghai in July this year. We see this gathering as a great opportunity to drive growth and innovation in the industry and we are looking forward to seizing this valuable opportunity to demonstrate innovative models, listen to the forum and to expand our business.
Apart from COVID-19, there are dangers and difficulties everywhere in life. These are not terrible but losing the courage to face them is. Rest assured that WNG will face them bravely and positively. Go, 2021!