CITIC SEC has released a research report indicating that the traditional supply-demand analysis framework for shipping cycles needs to be adapted and optimized in response to evolving market dynamics. The principle of "supply chain stability and security" has replaced the "efficiency and cost priority" approach of the globalization era as the primary core element, with pricing power clearly shifting toward those who control shipping capacity.
For container shipping, port congestion, blockages in key waterways, and the fragmentation of trade flows are creating persistent flashpoints of influencing factors. Shipping capacity allocation is becoming more flexible, and regional container shipowners who offer high-frequency, high-density services to secure quality customers, while leveraging long-term cost and efficiency advantages, are likely to benefit first.
In the oil tanker segment, VLCC quarterly profits are expected to maintain sequential growth this year. The Strait of Hormuz has moved beyond a binary state, with diversions and Gulf STS operations continuously absorbing effective capacity. The impact of disrupted key waterways and damaged energy infrastructure in certain regions remains the core factor influencing crude oil trade flow disruptions in the second half of the year.
The displacement of refined product tanker capacity westward is exacerbating supply tightness, and attention should be paid to the recovery of domestic exports and seasonal drivers. Additionally, the report highlights the marginal changes in express delivery prices during the peak season and the operational catalysts from the Xiong-Shang high-speed rail opening.
Key perspectives from CITIC SEC:
Container shipping: Traditional cycle frameworks need revision, with three major factors serving as marginal catalysts. "Supply chain stability and security" has replaced the "efficiency and cost priority" of the globalization era as the primary core element, with port congestion, blocked key waterways, and fragmented trade flows forming persistent flashpoints. For example, as of late August, global waiting-to-berth capacity accounted for approximately 12.6%, only slightly below the 15.7% recorded in the same period of 2022. Limited new port supply, high berth utilization, and the El Ni帽o effect make it difficult to fundamentally resolve the loss of effective capacity, which also impacts key waterways such as the Panama Canal.
The shift toward multi-to-multi, fragmented trade flows combined with the operational mechanisms of new alliances objectively increases regional container transportation demand. In the medium term, marginal changes in any one or multiple factors are expected to trigger pulse-like upward demand, which would then transmit to freight rates and valuations. Regional container shipowners with more flexible capacity allocation, high-frequency, high-density services that secure quality customers, and prominent long-term cost and efficiency advantages are likely to benefit first.
Oil tankers: VLCC quarterly profits expected to increase, refined products face inflection point. The Strait of Hormuz has moved beyond a binary state, with diversions and Gulf STS operations continuously consuming effective capacity. Middle East supply has been steadily flowing outward, and the spillover effects of blocked key waterways and damaged energy infrastructure in certain regions remain the core factors disrupting crude oil trade flows in the second half of the year. The Russian shadow fleet and releases from the US Strategic Petroleum Reserve are lengthening average voyage distances, with supply substitution and longer hauls particularly evident in August as US-Iran tensions intensified.
China's crude oil import inflection point has emerged. In the first week of September, average freight rate indices for August VLCC composite, TD22 (US Gulf-China), and TD34 (Oman-China) routes increased by 17%, 8%, and 13% month-over-month, reaching $259,000 per day, $184,000 per day, and 265.7 points, respectively. The sequential quarterly growth trend for VLCC freight rates is expected to continue in the second half of the year, with leading companies' quarterly profit growth potentially diluting the traditional speculation on peak season highs. Meanwhile, refined product shipping is at an inflection point, with westward capacity displacement exacerbating supply tightness; attention should be paid to domestic export recovery and seasonal drivers.
Express delivery: Focus on marginal price changes during the domestic peak season. In September, anti-involution policies in grain-producing regions are tightening, with strict enforcement of minimum market price standards. Attention should be paid to price gaps in Guangzhou, Dongguan-Shenzhen, and Chaoshan regions, while competition at the per-kilogram level above floor prices may become more market-oriented. Top-2 players are expected to leverage superior network capabilities to strengthen their ability to compress price differentials year-over-year, continuously transmitting cost divergence into profits and market share.
Aviation & high-speed rail: Air cargo peak season AI growth potential, Xiong-Shang high-speed rail catalyst. High oil prices are suppressing airline profitability from both supply and demand sides, compounded by reduced flight frequencies that weaken fixed cost amortization, driving the industry from general profitability in Q1 to losses in Q2. Reviewing historical aviation cycles, oil price disturbances affect short-term profit delivery pace, while supply-demand structure improvements form the core foundation for profit inflection points. Currently, oil price disturbances are fully reflected in valuations. Positive factors are beginning to re-converge with improvement trends emerging, and we anticipate oil price pullbacks resonating with ticket price elasticity during a future peak season. The aviation sector is expected to shift from short-term cost disturbances back to the medium-term logic of demand recovery and ticket price elasticity, with opportunities for left-side positioning.
Risk factors: Consumer confidence improvement falling short of expectations; domestic demand recovery progressing slower than anticipated; geopolitical events exceeding expectations; oil price and exchange rate fluctuations surpassing forecasts; express delivery price competition intensifying beyond expectations.