Asian Steel Group was interviewed by CCTV International English Channel to discuss the impact of the
[CCTV Reporter]: Please tell us, as a professional in global steel distributor, what is your opinion on whether the entire industry is ready for the chain reaction of this kind of black swan incident?
[Asain Steel Group Jin XinXin]: There is no doubt that the Suez Canal is one of the world's busiest oil and refined fuel, grain and other trade shipping channels connecting Asia/East Africa/Oceania and Europe. As of this morning, a total of 259 vessels lined up, up from 186 on Wednesday. It includes 148 ships sailing south and 111 ships sailing north.
It is difficult to give a single figure for the losses caused by severe canal congestion, but freight rates have skyrocketed. The cost of transporting a 40-foot container from China to Europe has climbed to about US$8,000, almost four times what it was a year ago. The Suez tanker, which normally carries 1 million barrels of oil, currently earns approximately US$17,000 per day, the highest level since June 2020.
If the stranded ship cannot re-navigate in a short period of time, other ships will have to bypass the Cape of Good Hope. For ships that are blocked in the Suez Canal, ships heading north need to sail 8200 nautical miles more to bypass the Cape of Good Hope. Depending on the speed of different ship types, they need to sail for an additional 19-24 days; if the ship has not reached the Suez Canal, it needs to detour at least 8- 10 days. This will further aggravate the tight supply of capacity and push up the rents of various ship types.
[CCTV reporter]: Who will finally pay for this incident?
[Asain Steel Group Jin XinXin]: From the perspective of ship types, the blockage of the canal has a greater impact on the oil tanker and container ship market, but has less impact on the bulk cargo market with grain, coal, fertilizer, steel, and iron ore as the main cargo. As the main transportation method of cross-border e-commerce, container transportation has also been impacted and challenged.
In recent years, the continuous rise of cross-border e-commerce has presented new challenges and opportunities to international logistics. Especially after the outbreak of the epidemic last year, the business model of international e-commerce logistics has also undergone great changes.
Previously, we used the direct deliver method of courier and parcel delivery after the order from overseas customers. Since three years ago, we started to set up overseas warehouses in European countries. Before we receive the customer's order, the e-commerce platform will ship all these goods to overseas warehouses, and then send them directly from the warehouse according to the online orders of European customers. Therefore, we have accumulated a large amount of inventory in warehouses in many European countries so that we can continue to ship to customers and minimize the negative impact of this incident.
