CCFI Commentary Issue 36, 2018
  Date:2018-09-05

Freight rates increased on most shipping routes

  In this week, China export container shipping demand remained in prosperous. Backed by the strong fundamentals, most carriers executed new rounds of rate hiking plan for vessels shipped from month beginning, which pushed freight rate up. On August 31st, Shanghai (Export) Containerized Freight Index (SCFI) issued by Shanghai Shipping Exchange (SSE) quoted 939.48 points, up by 4.2% compared with previous week.

  In the Europe route, the market was still during the traditional busy season and shipping demand remained in strong. The average slot utilization rate ex Shanghai kept above 95% with some of them departing with full loads. The hiked freight rate from last week was generally in stable. However, with some carriers small adjusting on their booking rates, the spot rate decreased slightly. On August 31st, freight rate in the route from Shanghai to Europe (including seaborne related surcharges) quoted USD933/TEU, down by 2.7% from last week. In the Mediterranean route, market was almost similar with that on Europe route. The average slot utilization rate ex Shanghai was above 95%. On August 31st, freight rate in the route from Shanghai to Mediterranean (including seaborne related surcharges) quoted USD908/TEU, down by 0.8% from last week.

  In the North America route, according to data from the US Department of Commerce, GDP growth in the second quarter of 2018 was upward corrected to 4.2%, exceeding initially expectations and was the largest growth rate since the third quarter of 2014. Benefited by this, the vigorous consuming demand spurred the shipping demand performance in the peak season. At the same time, as Sino-US trade friction had not eased, many traders had to deliver commodity ahead of time due to concerns about tariffs. In addition, the major shipping alliances had reduced their capacity to North America. As a result, most vessels destined to North America were almost fully loaded. Major carriers increased the booking rate and spot rate increased sharply. On August 31st, freight rates in the routes from Shanghai to USWC and USEC (including seaborne related surcharges) quoted USD2298/FEU and USD3485/FEU, up by 8.1% and 4.7% respectively with one week ago.

  In the Persian Gulf route, affected by regional instability factors, the overall demand remained in low. Some carriers have withdrawn the capacity from Far East to Iran and Iraq routes. The average slot utilization rate ex Shanghai was about 85~90%. The spot market rate rebounded by carriers Rate Restoration Program. On August 31st, freight rate in the Shanghai to Persian Gulf route (including seaborne related surcharges) quoted USD409/TEU, up by 4.3% from previous week.

  In the Australia/New Zealand route, transportation demand remained stable, and the capacity of the route had expanded recently. The average slot utilization rate ex Shanghai was between 80% ~ 90%. Affected by the expansion of capacity supply, some carriers cut their booking rate for market share. The spot market rate went down under pressure. On August 31st, freight rate in the Shanghai to Australia/New Zealand route (including seaborne related surcharges) quoted USD590/TEU, down by 5.0% against one week ago.

  In the South America route, the market volume remained at a high level, and the average slot utilization rate ex Shanghai kept above 95%. As the fundamentals were in strong, most carriers raised the booking rate. On August 31st, freight rate in the South America route (including seaborne related surcharges) quoted USD1753/TEU, up by 21.1% compared to last week.

  In the Africa routes, the market transportation demand recovered, and the supply-demand relationship was in healthy level. Most carriers pushed up the freight rate for vessels departing from early September. On August 31st, freight rate in the West Africa and South Africa route (including seaborne related surcharges) quoted USD1830/TEU and USD724/TEU , up by 11.9% and 48.4% compared to last week.

  In the Japan route, the off-season of the route was about to come to an end. The market transportation demand remained weak, and the freight rate of the route fluctuates slightly. On August 31st, freight index in the China to Japan route quoted 720.74 points, slightly down by 0.5% from one week ago.

 

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