A Value Analysis of the Shipping Industry
Marine industry overview:
More than two-thirds of the total international trade volume and China is one of the countries with the largest share of maritime transport. About 90% of China's total import and export freight is transported by sea. Today, about 20% of the world's freight is shipped to China, and about 20% of the freight is shipped from China to the rest of the world. China's total export shipping volume ranks first in the world, China's economic influence is also expanding, and the world's shipping center is also Gradually shifted from the West to the East.
With economic development and strategies, governments of various countries are also constantly adjusting import and export trade regulations and launching preferential treatment or restrictions, which will affect the shipping market.Characteristics of ocean transportation
Ocean transportation is one of the most important modes of international commodity exchange. The volume of cargo transportation accounts for more than 80% of all international cargo transportation. Ocean transportation has the following characteristics:
- Natural waterway
Ocean transportation is carried out by natural waterways, not restricted by roads and tracks, and has a stronger passing capacity. With changes in the political, economic, and trade environment and natural conditions, the routes can be adjusted and changed at any time to complete transportation tasks.
- Large carrying capacity
With the development of the international shipping industry, modern shipbuilding technology has become increasingly sophisticated, and ships have become increasingly large. The super-giant tanker has reached more than 600,000 tons, and the fifth-generation container ship has a capacity of more than 5,000 TEU.
- Low freight
Maritime transportation channels are naturally formed, and port facilities are generally built by the government. Companies operating maritime transport can save a lot of investment in infrastructure. Ships have a large carrying capacity, long service time, long transportation mileage, and low unit transportation cost, which provides favorable conditions for the transportation of low-value bulk cargo.
Ocean transportation also has obvious shortcomings: for example, ocean transportation is easily affected by natural conditions and climate, the flight schedule is not easy to be accurate, and the possibility of distress is also high.Types of ocean transportation
Ocean transportation can be further divided into coastal transportation and ocean transportation.
- Coastal transportation
Coastal transportation uses ships as a means of transportation to sail along the coast to transport goods and passengers.
- Ocean shipping
Ocean transportation refers to the transportation of goods and passengers across the ocean using ships as a means of transportation. From the perspective of the transportation business relationship, ocean transportation refers to the use of ships to transport goods and passengers between domestic ports and foreign ports or completely between foreign ports, that is, ocean transportation between countries. Or called international shipping. It can also be said that ocean transportation refers to the business behavior of ship operators who use ships as a means of transportation to transport goods and passengers between countries and collect freight. From the perspective of transportation business relations, ocean transportation also includes some coastal transportation. However, long-distance maritime voyages that need to cross the ocean are the main part of ocean transportation, and both the invested ship capacity and the quantity of cargo carried occupy a large proportion.
Ocean transportation has developed with the development of maritime trade. Therefore, the mode of operation of ocean-going ships must meet the requirements of trade for transportation. To adapt to the different transportation needs of different goods and different trade contracts, and to make rational use of the transportation capacity of ocean-going ships and obtain the best operating economic benefits, the current internationally commonly used ocean-going transportation operations can be divided into two major categories: liner transportation and charter transportation.
The upstream of the maritime industry is the basic supply industries such as shipbuilding, ship repair, ports, and docks, and the downstream serves the basic industries of the national economy such as steel and real estate. The shipping industry is mainly divided into dry bulk transportation, oil transportation, and container transportation according to the difference of the goods. The transmission effect of the entire industry chain is bottom-up, that is, downstream transportation demand will drive the growth or decline of the shipping industry. For the upstream end of the shipbuilding industry, the supply cycle is longer, which will lengthen the round-trip time between supply and demand in the industry, and may also cause other problems that the time of demand and supply is too late. In recent years, as companies increasingly use forward freight agreements (FFA) and other derivative instruments for hedging, the maritime industry and the financial industry have become more and more closely linked, which is helpful to the development of the maritime industry.
The foothold of shipping industry analysis is the analysis of the relationship between supply and demand. As a globally competitive industry, the shipping industry's demand is mainly the global trade volume of dry bulk, oil products, containers, etc., and the supply is mainly global shipping capacity. The game between demand and supply is finally transmitted to the price, which has become the core factor affecting the changes in profitability.Development of the maritime industry
Shipping is an industry highly dependent on imports and exports. The rise and fall of imports and exports determine the rise and fall of shipping. Among them, the transfer of the world shipping center to the rapid economic and trade development of China and various Asian regions has also promoted the enthusiastic development of the Asian shipping industry. International shipping resources are further concentrated in the Asian region, and its focus is shifting to East Asia, especially to China.
China Shipping Center
The China Shipping Center takes the Bohai Bay, the Yangtze River Delta, and the Pearl River Delta as the three major international shipping centers in China, namely, the Jiangsu-Zhejiang International Shipping Center, the Shanghai International Shipping Center, and the Hong Kong International Shipping Center, which are in line with the eastward shift of the world economic center And China’s rapid economic development.
The prosperity and decline of the shipping market have almost always performed an alternating trajectory of changes. The reason for the periodicity of this round-trip cycle is either with the prosperity and depression of the world economy or with the process of war, scientific development, and the development of human civilization.
With the development of the world economy and the shift of the center of gravity, the international shipping center is advancing from Western Europe to North America, and then to East Asia. Western Europe is represented by Rotterdam, which is an important international hub port in Europe; New York and Los Angeles represent important international hub positions in the North American region; when the center of world economic growth shifts from the Atlantic to the Pacific, Singapore and Hong Kong are the representatives Relying on its superior position, the Asia-Pacific ports have achieved good development and promoted the economy of the nearby regions. Nautical transportation is mainly divided into container transportation, bulk transportation, and tanker transportation according to the types of cargo, and it is transferred from the major producing countries to the major consumer countries through maritime transportation.
Take China as an example
- Dry bulk transportation
China's dry bulk shipping mainly includes three types of cargo: various ore, coal, and food crops, and overall imports are far greater than exports. Putting ore and coal together is mainly because a large part of coking coal in coal will be used for smelting ore, and the two are closely related. Also, that the price of special steel will affect the shipbuilding industry in the upstream shipping industry. The correlation between food and the other two is low, so they are listed separately.
- Oil transportation
The main cargoes transported by oil are of two types: crude oil and refined oil. Crude oil will not be used directly, and all will enter the smelting chain of petrochemical enterprises. The refined oil produced after the smelting chain reaches all parts of the country through shipping and land transportation. Part of China's refined oil is directly imported, and most of it is obtained from imported crude oil.
- Container shipping
The industrial chain structure of container shipping is relatively simple, but the materials involved are more complicated. Machinery and equipment, textiles and clothing, household appliances and toys account for the highest proportion of the goods transported. Since transportation is finished products, the related downstream industries are mostly sales industries.
The container shipping business mainly comes from the export of light industry manufacturing. China's light industry exports have obvious seasonality, especially during the Lunar New Year holiday in February every year, the export volume will drop to about one-third of the remaining, and around December each year is the peak season for exports. Therefore, China's container shipping also has obvious seasonal changes.
In terms of export value, the proportion of each part has been relatively stable since 2009. Among them, the electromechanical industry and high-tech products account for the bulk, followed by the clothing industry.Future industry outlook
The shipping industry is a capital-intensive and technology-intensive industry as well as a high-input and high-risk industry. Its assets and technical characteristics determine the market’s development potential. The shipping market has a long trade cycle, and the development of industrial characteristics is stable with little change or innovation, and relatively eliminated. The speed is slow. To conduct industrial restructuring and mergers is also one of the ways to enhance competitiveness.
Market concentration is increasing, mergers and acquisitions, and alliances continue to occupy major market shares. Changes in the internal and external environments have also caused changes in the liner shipping industry format, and at the same time, some new trends have emerged. In recent years, the integration of the global container shipping industry has accelerated, liner companies have continued to merge and undergo several reorganizations. There are currently three shipping alliances dominating the container shipping market and occupy a major share of the three major east-west trunk lines.
In 2030, China will continue to maintain its position as the world's largest trading country in goods and will dominate the global container shipping trade. In 2030, China’s total international shipping volume is expected to be 6.2 billion tons, accounting for approximately 17% of global shipping volume; the demand for iron ore and coal in dry bulk transportation will slow down significantly, and grain and oil imports will increase. Soon, the total volume of international container import and export ocean freight will exceed 200 million TEU.
Downstream users will penetrate the maritime industry. Cargo companies are not satisfied with only having chartering rights. To expand their right to speak in the shipping market and earn more profits, they will speed up the construction of their fleet while the current shipping market is down. The entry of these cargo companies will intensify market competition in the shipping industry.Practical application of new technology
Although the application of innovative technologies such as artificial intelligence and blockchain has aroused extensive discussions in the industry, the future of the shipping industry is not only about the application of innovative technologies, but how to improve the efficiency of shipping through technology. Although innovative technology is subverting the shipping and logistics industry in an all-round way, returning to the perspective of the industry, the industry should return to the basics and use technology to solve the actual needs of the industry.New trends in regional freight
The International Maritime Organization (IMO) signed a maritime emission reduction agreement in 2018, requiring the shipping industry to reduce carbon dioxide emissions by 50% in 2050 (compared to 2008). Short-haul shipping is one of the solutions to global warming. Take Southeast Asian countries as an example. Geographically speaking, these countries have many islands and land transportation is more difficult. Shipping is one of the most ideal logistics solutions. In particular, the carbon emissions of ships are lower than those of trucks and railways. "
Global trade is transforming into a decentralized trading network, and short-haul freight will also take a place. Take the United Kingdom as an example. Although we only have 213 ports, the containers are too concentrated to three ports in the southeast, causing traffic congestion. Conversely, if you ship goods directly from inland ports, you can reduce carbon emissions and ease congestion. Therefore, European countries should consider resuming the shipping industry in the suburbs to create local employment opportunities. Similarly, through digital technology, Southeast Asia and the South China Sea will benefit from the support of efficient logistics management systems.
Shipping logistics has shifted from being concentrated in international shipping centers to regional ports, which is a new global trend. Short-haul shipping is the most ideal pilot for the development of battery-powered motorized low-carbon ships. The operation of battery ships in regional trade is relatively easy. There are already ferries, supply ships, etc. that use battery-driven engines.
The short-haul shipping market has endless potential, especially in Asian countries.