|CCFI Commentary Issue 08, 2013|
|Weekly Report of China Export Container Transport Market
(CCFI Commentary in Issue 08, 2013)
Pre-holiday shipment spree pushes index up
High slot utilization, even close to 100%, was seen on most services out of China in the last trading week before the lunar New Year holiday, which was also contributed to the traditional service suspension during and after the holiday break.
Rates on most routes were encouraged by the combined effect of shipment rush and continuous capacity control. Decline slowed and composite indexes started to stabilize this week.
On Feb.08, the China Containerized Freight Index (CCFI) issued by Shanghai Shipping Exchange (SSE), representation of the whole market, quoted at 1144.55 points and the Shanghai Containerized Freight Index (SCFI), the mirror of the spot market, reported at 1208.37 points. Both barely changed from a week earlier, but rose 21.0% and 25.2% respectively compared to the same period of last year.
For many lines, a good start in 2013 boosted their confidence to the market prospect this year. Still, they need to realize that keeping supply match demand is the focus of this year’s strategy and if rates can stay at a sustainable level largely depends on the efforts lines made on capacity control, given a large amount of deliveries in 2013 and sluggish market condition.
On the Europe trade, the last batch of shipments ahead of holiday and effective control on capacity helped secure high slot utilization, with the average slot utilization rate of ships out of Shanghai staying above 95%, even 100% in some cases.
Although rates were solid before the holiday break, some lines chose to cut by a small margin to collect more cargoes and fill their ships during and after the holiday.
On Feb.08, the CCFI showed that the freight index of China/ Europe service quoted at 1508.72 points, almost unchanged from last week. Meanwhile, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of North Europe and Mediterranean slightly dropped 1.1% and 2.1% from a week earlier to $1301/TEU and $1258/TEU respectively.
Alphaliner, a Paris-based shipping consultancy, wrote in its latest report “carriers operating on the Asia/Europe trade would suspend some services during the holiday and the subsequent week, a move expects to slash 47% capacity on the trade.” It also worried about if carries resume the services in March, the market would lose balance again on the supply/demand condition.
Therefore, the post-holiday volumes and capacity supply would be two key factors to decide whether carriers can carry out the rate increase on Mar.15 successfully or how much increase can be achieved?
On the North America trade, demand remained stable, where the average slot utilization rate stayed at around 95%. At some ports in South China, boxes were reportedly rolled in some cases.
In general, ample volumes helped rates keep stable this week. On Feb.08, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of USWC and USEC marked $2445/FEU and $3606/FEU. The CCFI released on Feb.08 showed that the freight index of USWC service and USEC service stood at 1119.16 points and 1263.23 points respectively. The four figures all stood at almost the same level as a week ago.
In addition, under the mediation of Federal Mediation and Conciliation Service, the employers and labor union at ports along the east coast have reached a temporary agreement, which wins time for further negotiation between two parties and avoid the imminent strike despite the pending disputes.
The outcome enables lines to offer a stable service that both carriers and shippers can benefit from.
The pre-holiday shipment rush also boosted volumes on the Persian Gulf and Red Sea services, where the average slot utilization rate maintained around 90%. However, it varied very much among carriers. Rates experienced a small drop this week.
On Feb.08, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of Mid-East region plunged 1.1% to $718/TEU.
Volumes went down in the last week before the holiday compared to the previous week on the Australia and New Zealand service, where the average slot utilization rate hit around 95% and rates kept stable.
On Feb.08, the CCFI showed that the freight index of China/Australia and New Zealand service stood at 1045.33 points, almost unchanged from last week.
On the Japan service, volumes rose significantly from last week, inspiring the average slot utilization rise to nearly 90%. Rates sustained stable. On Feb.08, the CCFI showed that the freight index of Japan service quoted at 765.31 points, almost unchanged from last week.
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