|CCFI Commentary Issue 12, 2013|
|Weekly Report of China Export Container Transport Market
(CCFI Commentary in Issue 12, 2013)
Indices slide down due to weak volume growth
China export box market remained sluggish this week. Demand was still weak and rates went down generally as most export-oriented manufacturers haven’t fully resumed production yet.
However, some carriers operating on the trades like Europe, Mediterranean, Persian Gulf and Australia and New Zealand carried out the rate increase plan this week, pushing up the average booking rates on many trades.
On Mar.15, the China Containerized Freight Index (CCFI) issued by Shanghai Shipping Exchange (SSE), the representation of the whole market, marked at 1090.92 points, down 1.8% from last week. Meanwhile, the Shanghai Containerized Freight Index (SCFI), the mirror of the spot market, marked at 1213.31 points, up 13.1% from a week ago.
On the Europe and Mediterranean trades, recent demand was dampened by the facts that factories haven’t worked in full swing after the Lunar New Year, thus the average slot utilization rate just stood at around 70%.
The planned rate increase plan, originally effective since mid-March, was affected as the equation of supply/demand hasn’t improved. Rates for Individual voyages moved towards different directions, and the real increase are weaker than originally planned. Most carriers enforced the $300/TEU～$600/TEU rate increase this week for increasing revenues on Northwest Europe trade. However, some carriers postponed the increase plan to late March because of the weak volumes and overcapacity.
The overcapacity is worse on the Mediterranean market. As carriers are sitting on the fence, the average booking rates for east-Med service slid steadily. In comparison, rates for west-Med service skyrocketed, driven by the rate increase on the Northwest Europe service.
On Mar.15, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of Europe and Mediterranean significantly rose 42.4% and 42.3% respectively from last week to $1423/TEU and $1366/TEU.
Demand improved but not significant on the North America trade this week. Carriers gradually loosened capacity supply after holiday on the USWC service, putting the average slot utilization rate at around 75%. The scale of capacity on the USEC trade is relatively small, so the average slot utilization rate rebounded above 75% this week.
Carriers put off the rate increase plan from mid-March to the end of this month, and the increase range will depend on the future market condition.
On Mar. 15, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of USWC and USEC plunged 3.1% and 1.6% from last week to $2122/FEU and $3279/FEU respectively. It is said that to relieve the increasing unbalance of supply and demand, some carriers are considering culling capacity in early April.
On the Australia and New Zealand trade, demand rose steadily. On the supply side, carriers have effectively control the capacity since the China Lunar New Year, supply/demand condition continued to develop in a positive way. The average slot utilization rate maintained above 90% with some sailings closing 100%, which helped the mid-March rate increase plan go smoothly, lifting the booking rates for some sailings.
On Mar. 15, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of Australia and New Zealand surged 7.7% from last week to $1046/TEU.
Volumes dropped marginally on the South America trade this week. Carriers gradually added capacities, deteriorating supply/demand fundamentals. The average slot utilization rate fell to around 70%. Rates continued to loss $50～70/TEU. On the South America west coast service, rates have fallen below $1000/TEU, while rates for the South America east coast service have slipped to around $1800/TEU.
On Mar.15, the CCFI showed that the freight index of China/South America service marked at 1011.53 points, down 2.8% from last week.
Japan service saw a stable rise in volume this week. The average slot utilization rate of ships out of Shanghai remained above 70%, and rates kept stable this week.
On Mar.15, the CCFI showed that the freight index of Japan service quoted at 752.03 points, almost unchanged from last week.
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