|CCFI Commentary Issue 18, 2013|
|Weekly Report of China Export Container Transport Market
(CCFI Commentary in Issue 18, 2013)
Rate Declined Continuously as Indexes Fell
China export box market remained stable this week. Although demand rose slightly on a few services as shippers wanted to ship their goods ahead of the Labor Day holiday, general demand/supply condition hasn’t rebalanced since carriers put extra capacity on major trades. Spot rates continued to decline this week caused by most carriers’ negative about the outlook. On Apr. 26, the China Containerized Freight Index (CCFI) issued by Shanghai Shipping Exchange (SSE), the representation of the whole market, marked at 1095.30 points, slightly down 0.2% from last week; while the Shanghai Containerized Freight Index (SCFI), the mirror of the spot market, marked at 1049.02 points, down 3.4% from last week.
Dampened by the sluggish economy in Europe, residents’ consuming willingness and ability have been limited for some time. Despite the traditional export rush ahead of labor holiday, transport demand was unable to surge. On the supply side, as a number of new vessels came into service recently, capacity rose significantly this month. According to Alphaliner, as of April 1, weekly capacity on Far East/Europe service amounted to 365,000 TEU last week, and up 1.3% month on month. Supply is still well over demand, causing the average slot utilization rate just over 80%. Carriers continued to cut rates for bigger market shares. Rates for most sailings have declined below $800/TEU, even $700 TEU in some cases. On Apr.26, the CCFI showed that the freight index of Europe service marked at 1345.56 points, down 2.6% from last week, 6.8% lower than the same period of last month.
On East Mediterranean service, boxes rose moderately as the early coming of the Ramadan holiday, where the average slot utilization rate rose to 85% above and decline of rates slowed. Rates were in the range of $850/TEU-$900/TEU this week. In contrast, West Mediterranean service was still enveloped by the dismay of debt crisis, where demand was weak and rates fell to around $850/TEU. On Apr.26, the CCFI showed that the freight index of Mediterranean service marked at 1310.28 points, down 0.2 % week on week and declining 7.1% month on month.
U.S. economy continued to be positive in April, boosting consumers’ demand there. The traditional export rush before holiday also contributed to the rise of demand this week. However, some ships were shifted from Asia/Europe trade to USWC service because of the cascading effect, which to some extent offset the positive result generated by the pick-up of liftings. The average slot utilization rate in the USWC trade kept around 85%. Average vessel utilization of USEC service soared to 90% above owing to the limited supply, but rates still fell. On Apr. 26, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of USWC and USEC quoted at $2102/FEU and $3251/FEU respectively, down 3.2% and 1.3% from last week. Some market participants suggested that as the recovery sign of demand was emerging, carriers intended to increase rates to cover some costs. It’s said that several carriers have announced to increase rate by around $400/FEU since late May.
On Persian Gulf service, volumes continued upward trend since mid-April. The trend continued this week, lifting the average slot utilization rate to around 85%. Nevertheless, spot rates declined this week, as carriers were unable to fill their ships. On Apr. 26, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of Persian Gulf plummeted by 9.0% from last week to $927/TEU.
Volumes were on the decline as the export rush fell short of expectation on South America trade. Rates also dropped since carriers poured extra capacity on this route. Rates for boxes heading for the west coast of this continent fell under $800/TEU and $1350/TEU for boxes heading for ECSA. On Apr.26, the CCFI showed that the freight index of South America service dropped 1.8% to 883.06 points.
Volumes went down steadily on Japan service this week. Average vessel utilization of ships from Shanghai to Japan stood at around 75% and Rates kept stable. On Apr.26, the CCFI showed that the freight index of this service marked at 735.58 points, almost unchanged from last week.
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