Looking ahead to the market trends in the third quarter of 2024, according to the China Shipping Business Climate Survey, although the business climate index and confidence index of all types of shipping companies are expected to decline to varying degrees in the next quarter, they will still remain in the business climate range.
The prosperity index of shipping companies is improving
From the perspective of subdivided industries, in the second quarter of 2024, the prosperity index of shipping companies was 126.12 points, up 15.76 points from the previous quarter, entering a relatively prosperous range; the confidence index of shipping companies was 142.67 points, up 34.36 points from the previous quarter, entering a relatively prosperous range from a micro-prosperous range. The overall operating conditions of shipping companies are improving, and entrepreneurs are confident. From the perspective of various operating indicators, although the operating costs of shipping companies continue to increase, the utilization rate of cabin space and freight income have increased significantly, and the profitability of enterprises has increased significantly; corporate loan liabilities have decreased, working capital is ample, corporate financing is relatively easy, labor demand has increased, and based on confidence in the future market, shipowners have gradually increased their willingness to invest in shipping capacity.
At the same time, the prosperity index of dry bulk shipping companies has returned to a relatively prosperous range. In the second quarter of 2024, the prosperity index of dry bulk shipping companies was 118.68 points, up 10.98 points from the previous quarter, and re-entered a relatively prosperous range; the confidence index of dry bulk shipping companies was 132.36 points, up 16.65 points from the previous quarter, and entered a relatively prosperous range. The overall operation of dry bulk shipping companies is stable, and entrepreneurs are optimistic about market operations. Judging from various operating indicators, although the operating costs of dry bulk shipping companies continued to rise and the ship turnover rate declined this quarter, due to the increase in freight income, the companies increased their capacity investment, which greatly improved their profitability; the companies had ample working capital, reduced loan liabilities, and relatively easy financing. The companies' risk resistance was strengthened, and the companies' willingness to invest in ship capacity increased, which increased their labor demand.
Container transport companies see a significant improvement in business sentiment
The report shows that the prosperity and confidence index of container shipping companies has increased significantly. In the second quarter of 2024, the prosperity index of container shipping companies was 141.68 points, a sharp increase of 30.91 points from the previous quarter, entering a relatively prosperous range; the confidence index of container shipping companies was 153.0 points, a sharp increase of 51.93 points from the previous quarter, entering a relatively strong prosperity range. The overall operating conditions of container shipping companies are good, and entrepreneurs are full of confidence in the overall development of the industry. From the perspective of various operating indicators, only the operating costs of container shipping companies continued to rise this quarter, while the capacity continued to increase, the utilization rate of cabin space increased significantly, and the freight income increased significantly, resulting in a significant improvement in the profitability of enterprises. The company's working capital is very abundant, the difficulty of corporate financing continues to decrease, loan liabilities continue to decrease, labor demand increases, entrepreneurs have a strong desire to invest in ship capacity, and the company's operating indicators are improving across the board.
The prosperity index of Chinese port enterprises has returned to the prosperous range. In the second quarter of 2024, the prosperity index of Chinese port enterprises was 121.46 points, up 26.41 points from the previous quarter, rising from the slightly depressed range to the relatively prosperous range; the confidence index of port enterprises was 138.89 points, up 14.89 points from the previous quarter, and maintained in a relatively prosperous range. The overall operating conditions of Chinese port enterprises are stable, and port entrepreneurs have sufficient confidence in the future development of the market. Judging from various operating indicators, the operating costs of ports remain at a high level, and port charges continue to decline, but the throughput and berth utilization rate of ports have increased significantly, which has improved the profitability of enterprises. The assets and liabilities of enterprises have decreased, the demand for labor has increased, the working capital of port enterprises is very ample, the difficulty of enterprise financing continues to decrease, and the investment in new berths and machinery of port enterprises has increased.
The shipping service enterprises' business climate index for the quarter was 117.21 points, up 13.13 points from the previous quarter, entering a relatively prosperous range; the shipping service enterprises' confidence index was 143.83 points, up 29.67 points from the previous quarter, entering a relatively prosperous range.
Nearly 60% of container transport companies: Freight rates are expected to fall in the first quarter of next year
Looking ahead, according to the China Shipping Business Survey, the China Shipping Business Climate Index is expected to be 118.50 points in the third quarter of 2024, down 3.54 points from the current quarter, returning to a relatively prosperous range; the China Shipping Confidence Index is expected to be 136.30 points, down 5.58 points from the current quarter, maintaining a relatively prosperous range. Overall, although the business climate index and confidence index of all types of shipping companies are expected to decline to varying degrees in the next quarter, they will still remain in the prosperous range.
It is worth noting that since the beginning of this year, prices in the container shipping market have significantly strengthened, which has had a significant impact on the import and export of global container goods.
In this context, in response to the question of when container freight rates will return to normal levels, the China Shipping Prosperity Index Compilation Office of the Shanghai International Shipping Research Center conducted a survey of relevant container shipping companies and shipping service companies across the country. Among the container shipping companies surveyed, 57.89% of the companies said that container freight rates will return to normal levels in the first quarter of 2025; 15.79% of the companies believed that they would return to normal levels in September or October; and another 10.53% of the companies said that freight rates would return to normal levels in December. Among the shipping service companies surveyed, 37.5% of the companies said that container freight rates will return to normal levels in the first quarter of 2025; 25.0% of the companies believed that they would return to normal levels in October; 19.44% of the companies said that they would return to normal levels in September; and another 12.5% of the companies believed that freight rates would return to normal levels in August. In the current situation where demand in the international container shipping market has recovered and the supply of effective shipping capacity is tight, the situation of rising freight rates may continue in the short term.
In addition, the global container freight rate has been rising rapidly recently, and the "scarcity of a cabin" has reappeared. Against this background, the China Shipping Prosperity Index Compilation Office of the Shanghai International Shipping Research Center conducted a survey on the shortage of containers in container shipping companies and port companies. Among the container shipping companies surveyed, 73.16% of the companies said that there was a certain degree of shortage of containers, of which 31.58% of the companies said that there was a shortage of about 10% of containers, 26.32% of the companies said that there was a shortage of about 20% of containers, and 5.26% of the companies said that there was a shortage of 50% or more of containers; another 36.84% of the companies said that there was no shortage of containers for the time being. However, among the port companies surveyed, only 35.78% of the ports said that there was a shortage of containers, of which 21.74% of the companies said that there was a shortage of about 10% of containers, 8.7% of the companies said that there was a shortage of about 20% of containers, and 4.35% of the companies said that there was a shortage of 30% or more of containers; another 64.22% of the companies said that there was no shortage of containers for the time being.