The price war for container trucking in China has begun

container trucking

 

From “hard to find a container” to the “era of grabbing goods”, various orders for export from China to the world, including container volume, have dropped by 30%-40% this year. As an important link in foreign trade logistics, container truck transport has also started a “price war”!

 

Orders down 30%-40%, container truck transport starts a “price war”

 

According to a report by CCTV, several major ports in China are currently facing severe challenges in the container truck transport industry. Due to the sharp decline in foreign trade orders, the container truck transport industry has also been affected. There are fewer orders, lower profits, lower wages, and even a price war to attract more business. This phenomenon is clearly not a good sign, and a detailed analysis will reveal many influencing factors, such as changes in market supply and demand, cyclical patterns, and changes in China’s foreign trade system, among others. Logistics companies and individuals need to be prepared for these factors.

 

1.High empty container rates for container trucks and serious decline in driver wages

 

As mentioned in a report by CCTV, Ningbo Port in Zhejiang has an annual container throughput that ranks third in the world. Although the number of empty containers has decreased by 30% from the 60,000 standard containers in February, there are still 40,000 standard containers in idle status. In addition, Yantian Port, an important container transport port in southern China, currently has a stack of empty containers six to seven stories high. This is the highest record of container stacking height since the port was built 30 years ago. The container truck transport business volume in Shanghai Port has also dropped significantly, not only decreasing by 80% compared to before the pandemic but also far below the level during the pandemic in 2020 and 2021. In 2021, container truck drivers at Yantian Port could earn a salary of 15,000 RMB or even higher, and there were often situations where high-paying jobs were hard to come by. Now, companies can recruit drivers for around 8,000 RMB, and there are not many recruiting companies, resulting in intense internal competition among drivers. There is a huge contrast from the previous situation of not being able to find drivers to the current situation of queuing for orders.

 

2.Reasons for the price war

 

First, the decline in export volume of foreign trade orders. As an essential link in the foreign trade transportation chain, container transportation is inevitably affected. The reduction in export volume also has other influencing factors, such as the global economic downturn, leading to a slowdown in trade growth and a decline in foreign trade orders. The rise of manufacturing in Southeast Asian countries has also brought us significant challenges. In addition, the global monetary tightening caused by the rise of the U.S. dollar has led to a significant decrease in foreign purchasing, weak consumption, and reduced import demand from overseas countries such as Europe and the United States, which also affects export volume.

 

Secondly, there are too many containers and oversupply has led to intense internal competition. From the difficulty in finding a single container in 2020 to the surge in the container shipping market in 2021, more people have entered the industry over the past two years, resulting in a large production of containers. In 2021 alone, the global production of containers exceeded 7 million. With the decrease in orders, competition within the industry has intensified, leading to severe “internal competition”. In addition, disruptive behaviors such as malicious price wars have caused normal participating truck drivers to feel particularly aggrieved. Compared with the overall risk resistance of the fleet, this is almost a fatal blow to individual truck drivers.

 

Thirdly, it is influenced by market laws. From January to March, it is typically a slow season for the market, with lower business volume than other quarters. Influenced by the economic downturn, many companies have gone bankrupt during this wave, and many foreign-funded enterprises have also withdrawn, exacerbating internal price wars.

 

container trucking

 

Essentially, the root cause of this container transportation price war is too many vehicles and too few shipments. Although diesel prices have fallen somewhat, cost expenditures still account for more than 30% of total expenditures. According to a staff member, if Shanghai can introduce a national IV elimination subsidy program and accelerate the elimination of national IV in the second half of the year, it may encourage some people to sell their vehicles and switch to other industries, thus easing some of the contradictions arising from too many vehicles and too little cargo. However, to truly address the current transportation market situation, Loongle believes it is necessary to expand the source of their own goods. On the one hand, inland ports are developing rapidly, and logistics companies should not limit themselves to international ports. On the other hand, they should take advantage of policy advantages and accelerate transformation. Of course, survival is determined by the law of the jungle. In this elimination game, to remain invincible, it is necessary to anticipate changes in advance and adapt to changes in the situation

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