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| CCFI Commentary Issue 21, 2013 |
| Weekly Report of China Export Container Transport Market (CCFI Commentary in Issue 21, 2013) Indices Dive in Another Week with Flat Demand The downward trend dominated China export box market in the week ending May 17. Since oceangoing trades lost momentum this week, oversupply worsened and rates fell generally. On May 17, the China Containerized Freight Index (CCFI) issued by Shanghai Shipping Exchange (SSE), the representation of the whole market, marked 1069.97 points, down 1.2% from last week. The Shanghai Containerized Freight Index (SCFI), the mirror of the spot market, fell 1.9% from a week ago to 990.78 points. As the tradition peak season of Asia/Europe trade coming since mid-May, volumes increased again in the week of May 17. However, a huge amount of new vessels have been delivered since Q2, which forced carriers to absorb extra capacity on Asia/Europe trade. The growth of supply surpassed demand, deepening the overcapacity. To fill their ships, carriers cut rates sharply. As a result, rates have dropped week by week since Q2 and the aggregated decrease amounted to over $400/TEU. In some cases, rates fell below $600/TEU. On May 17, the CCFI showed that the freight index of Europe service quoted at 1247.83 points, down 3.4% from last week, a decrease of 13.3% compared to the beginning of Q2. Rates for Mediterranean service also tumbled this week, but slower than last week. Economy of traditional imports nations, such as Italy and Spain, is still weak and consumers are less confident to consume, leading to worsened supply/demand condition. Rates for west-Med services plunged below $700/TEU at lowest. In comparison, demand on East-Med service rose moderately in the same week due to the approach of Ramadan in coastal countries along East Med, North Africa and Black Sea, making an alleviation for the imbalance. Some carriers made efforts to hike rates by around $100/TEU. On May 17, the CCFI showed that the freight index of Mediterranean service marked at 1206.72 points, down 2.1% from last week, lower 3% compared to a decrease of 5.1% last week. Recovery of U.S. economy has been increasingly clear since May, giving a momentum to demand. Major carriers are adding capacity to this service. Veteran carriers expanded capacity by deploying new vessels or replacing smaller units by larger ones. Moreover, there are some newcomers entering this arena. The massive expansion of capacity upset the positive effects brought by the rise of demand. There is no obvious improvement on demand/supply condition, seeing the average slot utilization rate for USWC service at around 85%. Less capacity was added on the USEC service, so the average slot utilization rate was higher, at around 90%. Carriers took different strategy on pricing this week, some lifted rates by $200-$300/FEU, others cut rates by $50-$100/FEU for competing for more market shares. On May 17, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of USWC and USEC marked $2012/FEU and $3169/FEU respectively, rose by 0.8% and 0.5% from last week. On Persian Gulf and Red Sea service, political turbulence and weak consumer confidence continued to dent demand. Despite temporary sailing suspension, demand/supply condition failed to improve, with the average slot utilization rate keeping at around 85%. Without strong volume support, rates were unable to persist the rise seen in last week. Rates for Persian Gulf service slid to around $900/TEU. On the Red Sea service, rates kept sideway and stayed in the range of $700/TEU-$800/TEU. On May 17, the CCFI showed that the freight index of China/ Persian Gulf and Red Sea service marked 1127.51 points, down 1.0% from last week. On Japan service, volumes surged this week as short holiday ended. Average slot utilization rate for ships from Shanghai to Japan rose to around 70% and rates remained stable. On May 17, the CCFI showed that the freight index of China/Japan service marked 754.26 points, almost unchanged from last week. |
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