CCFI Commentary Issue 17, 2013
  Date:2013-04-26
Weekly Report of China Export Container Transport Market
(CCFI Commentary in Issue 17, 2013)

Capacity management is critical to improve the supply/demand imbalance

Most China exports trades were in the doldrums this week. Despite slow recovery of demand, carriers’ efforts to stabilize rates were almost fruitless under the pressure of overcapacity. Spot rates for most services dropped to different extent this week. On Apr.19, the China Containerized Freight Index (CCFI) issued by Shanghai Shipping Exchange (SSE), the representation of the whole market, marked at 1097.06 points, down 1.0% from last week; while the Shanghai Containerized Freight Index (SCFI), the mirror of the spot market, marked at 1086.04 points, down 2.8% from last week.

In Europe, consumers’ demand is recovering slowly. Although carries are striving to increase rates and limiting capacity, but the result was not as ideal as expected, as they took such measures individually. The average slot utilization rate for service from Shanghai to base ports in Europe stood at around 80% this week. The relatively weak vessel utilization was unable to give incentives to rates amid a throat-cutting price competition. On Apr.19, the CCFI showed that the freight index of Europe service marked at 1381.38 points, down 1.0% from last week.

On the Mediterranean service, the average slot utilization rate remained around 85% and rates continued to go down. On Apr.19, the CCFI showed that the freight index of Mediterranean service plunged by 4.4% from last week to 1312.86 points.
 
Recovery of volumes was not steady on the North America trade. Moreover, capacity was on the rise, giving little support to hold up the gains from previous rate increase, which can be mirrored by the fact that spot rates went down further following last week’s decrease. The average slot utilization rate for service from East China to USWC stood at around 85%, while figures for USEC service ranged from 80%-95% among ports along this coast. On Apr.19, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of USWC quoted at $2171/FEU, down 2.5% from last week. The USEC service saw a similar drop, closing at $3295/FEU on Apr.19.

On the Persian Gulf service, shippers rushed to ship goods before the Ramadan, boosting the average vessel utilization up to 80% above. In some cases, it even closed to 100%. As capacity is surplus in general, carriers that hiked rates in last week reduced them in this week. Despite rate increased by some carries this week, the average rate trend was downward. On Apr. 19, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of Persian Gulf tumbled 2.6% from last week to $1019/TEU.

Thanks to the effective and collective management on capacity by AADA, loading rate of the Australia service remained stable and stayed at a relatively high level. The average slot utilization rate of service from Shanghai to Australia and New Zealand kept 90% above. However, rates started to go down this week after last week’s increase due to weak demand growth, which is similar to the Persian Gulf service. On Apr. 19, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of Australia and New Zealand fell 3.4% from last week to $1068/TEU.

On the Japan service, liftings rose significantly from last week. The average slot utilization rate climbed up to around 80% and rates fluctuated slightly this week. 

On Apr.19, the CCFI showed that the freight index of this service marked at 733.87 points, slightly down 1.1% from last week.
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