|CCFI Commentary Issue 16, 2013|
|Weekly Report of China Export Container Transport Market
(CCFI Commentary in Issue 16, 2013)
Main trades remain weak despite boom of Niche markets
Demand was stable on China export box market this week. However, due to the large amount of new-added vessels, supply/demand conditions worsened and rates dived on the Europe and U.S. trades. In contrast, volumes rose moderately on the Persian Gulf service and Australia and New Zealand service. Rates for those trades soared as carriers managed to carry out the general rate increase. On Apr. 12, the China Containerized Freight Index (CCFI) issued by Shanghai Shipping Exchange (SSE), the representation of the whole market, marked at 1108.27 points, slightly down 0.3% from last week; while the Shanghai Containerized Freight Index (SCFI), the mirror of the spot market, marked at 1117.24 points, down 2.1% from last week.
Although most factories in China resumed production after holiday break, unemployment rate in Europe are rising, dampening consumers’ spending willingness there. In general, volumes were weak on the China/Europe service. On the supply side, the pressure of newbuildings persisted. CKYH added 13000TEUs on its NE3 service connecting Asia and Europe this week, deteriorating the supply/demand conditions. Rates are under greater pressure due to low load factors, with the average vessel utilization of major lines staying around 75% this week. On Apr.12, the CCFI showed that the freight index of North Europe service marked at 1394.97 points, down 3.1% from last week.
On the Mediterranean service, fundamentals didn’t improved, where the average slot utilization rate remained around 85%. On Apr.12, the CCFI showed that the freight index of Mediterranean service marked at 1373.52 points, down 2.8% from last week. With the improved economic indicators in U.S., volumes on the North America trade rebounded mildly. However, carriers shifted some capacity to this trade from the Europe service where capacity is increasing, which to some extent offset the positive effect brought by the rising demand. On the services from ports in East China to USWC and USEC, the average slot utilization rate stood at 80% and 85% respectively. The load factors of services from North China are better, 85% for USWC and 90% for USEC.
In South China, shippers’ interest is inadequate, thus the average slot utilization rate stood at 65% for USWC and 85% for USEC. Rates for service from Shanghai to ports along USWC and USEC slightly dropped due to the ample available capacity. On Apr. 12, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of USWC and USEC quoted at $2226/FEU and $3380/FEU respectively, down 3.3% and 2.1% from last week.
On the Persian Gulf service, the influence of Ramadan is emerging, which will fall on the beginning of July. Many carriers revealed that shipper’s interests of export are increasing this week, boosting the average slot utilization rate for Shanghai/ Persian Gulf service to 80% above. With the rising lifting, most carriers are carrying out the planned April’s rate increase plan, ranging from $100～$200/TEU. On Apr. 12, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of Persian Gulf surged 19.3% from last week to $1046/TEU.
The Australia and New Zealand has stepped into slack season, however, under AADA’s strict management on capacity, supply/demand conditions improved, seeing the average slot utilization rate of service from Shanghai to Australia and New Zealand rebounding to 95% above. Members of AADA managed to push through the mid-April rate increase. The average rise of spot rates went up around $100/TEU. On Apr. 12, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of Australia and New Zealand surged 8.0% from last week to $1106/TEU.
On Japan service, volumes slightly dropped this week, causing average slot utilization rate of ships leaving Shanghai ports for Japan slipping back to around 65%. Rates dropped as well. On Apr.12, the CCFI showed that the freight index of this service marked at 741.70 points, down 1.4% from last week.
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