Cherry trees are in full blossom now in Yokohama. I had a chance to visit Sankei-en Garden which is famous for cherry blossom viewing. Cherry blossoms are expected to bloom one week later than usual by cold of this year. It was three-quarter in bloom there. However, still many people came for cherry blossoms viewing. Cherry-pink color had covered all over the mountain and it was luxurious and created gaiety to a feeling just to look. I could sense the atmosphere of rotating season firsthand.
According to the March TANKAN of Bank of Japan the business results of the export companies contributed by weak yen have improved the achievements judgement index consecutively for two quarters. By recovery of the capital spending demand and a firm tone of the export for China the business perception is improved in a big company, a medium, a small-sized business, and manufacturing industry, a non-manufacturer. In the background, it points out recovery of the world economy, recovery of the production of the world manufacturing industry, progress of the excessive stock adjustment in China.
On April 6, the Asian Development Bank announced the prospect of 5.7% of GDP growth rate of 2017 of Asia. Japan, the European and American economic growth rate is 1.9% in total and 7.4% for India, 6.5% for China. Asia occupies 60% of world GDP growth rate. On the other hand, it points out a change of the leader from China to India because China expects slow in economy by shifting weight from export dependence to consumption and India expects more investment by brisk domestic spending and financial reform of the government.
The long term contract of a marine container freight rate from Japan to Europe revised in April could not reach to the level of an expectation but it is certain that it becomes the driving force to greatly improve the income and expenditure of the shipping company. On the other hand, strong eastbound from Europe and reduction of a number of service ships have caused space shortage and it would cause one of factors for increase of eastbound freight rate. The export for North America from Asia will increase towards the summertime from the second-quarter. It is certain that it becomes the fair wind for North America SC negotiations revised in May.
For shipping companies, it is the present conditions that the empty containers from North America and Europe could not catch up with container demand ex China, Asia. It could be attributed to several factors. In the case of North America, containers are scattered in the North America inland, and it takes time to return them to the main coastal ports of the North America. In case of Europe there are many 40f from Asia to Europe on the contrary many 20f ex Europe to Asia so that there happens mismatch of container size demand in Asia. In addition, ships could not load empty containers because ships are full in weight cargo from Europe to Asia. The policy of reducing the number of ships in service during the winter season could accelerates lack of containers in Asia.
The 2 Giant Alliances of Ocean Alliance (28% of market share) and The Alliance (18%) started in April. 3 Giant Alliances have appeared together with 2M Alliance which had already started. 3 Giant Alliances accounts for 80% of marine container freight transport volume in the world. The current lack of containers in Asia seems to be a little influence by the confusion of the transition period during the reorganization of shipping lines related to 3 Giant Alliances.
The paint of all containers produced in China has place of water-based paint by force from April. Therefore, Chinese container makers are forced to stop production for the maintenance of the plant for 1-2 months. The current new container price is $2,350 per 20f (water-based paint) and new container stock in China reaches 640,000TEU now. It goes up because of the speculative ordering by leasing companies before the container price rise. It is said that half of them seems to have been already booked by shipping lines. Judging from the number of the current stock of the new containers, the quantity of new containers could make up for the period when the factories could set up their production lines to adjust to the water-based paint. However, they could hardly solicit the cargo without securing necessity of containers as psychology of shipping lines. The market becomes the seller’s market of the lease company by all means because the securing of container becomes given priority. The leasing companies make the most of this seller’s market effectively and lets their North American surplus stock with the offer of the new containers and promotes Leverage Lease contract to have the shipping lines to take their surplus stock in the North America.
We, EF International Ltd. entered in the eighth year in this March. It has already passed one year in this April after we moved to the current office near to JR Sakuragicho Station in Yokohama. We will add the new staff in this April and we have made a fresh resolution to challenge for playing an active part in container business and the related business.