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| CCFI Commentary Issue 22, 2013 |
| Weekly Report of China Export Container Transport Market (CCFI Commentary in Issue 22, 2013) Weak Demand Gives Little Momentum to Index China export box market remained lackluster this week. Volume growth kept stagnant on the Europe and Mediterranean services. Carriers cut rates to compete for cargoes, dampening rate growth. On the North America trade, shipping lines started to lift rates, slightly boosting booking rates in the week ending May 24 and slowing the decline of indexes. On May 24, the China Containerized Freight Index (CCFI) issued by Shanghai Shipping Exchange (SSE), the representation of the whole market, marked 1057.92 points, down 1.1% from last week. The Shanghai Containerized Freight Index (SCFI), the mirror of the spot market, quoted at 991.25 points, barely changed from last week. On the Europe trade, rates kept downward this week, with the lowest level below $600/TEU. Carriers were cautious on capacity supply, which partly offset the effect of new deliveries. According to Aphaliner, weekly available capacity on the Asia/Europe trades in May dropped 1.2% from a year earlier. Nevertheless, volumes on this route remained weak, causing the average slot utilization rate just reaching around 80%. In addition, as carriers waged price war again, rates have plunged since mid-March, with the total loss up to $800/TEU. On May 24, the CCFI showed that the freight index of Europe service quoted at 1203.17 points, down 3.6% from last week, and fell 16.7% from the end of last quarter. To restore rates, carriers announced to increase rates by $500/TEU-$1000/TEU since June. Given rates are in the trough, industry analysts are optimistic on the prospect of rate restoration, but the actual increase largely depends on the market condition then. Carriers on the Mediterranean service told East-Med service performed well better than West-Med service under the support of strong volumes generated by Ramadan holiday. However, current rate for West-Med service has fallen below $700/TEU, therefore, carriers urgently need to restore rates. Following the rate increase on East-Med service, some carriers started to push rate up in early June, despite no obvious turnaround. On May 24, the SCFI showed that the freight index of Mediterranean service marked at $760/TEU, down 2.4% from last week. Rates are under great pressure on the North America trade. Despite good macroeconomic data of U.S. and decent demand recovery, supply/demand condition on this trade continued to worsen, as weekly capacity increased nearly 10% over the same period of last year. Average slot utilization rate for USWC and USEC services both stood at around 80%. Some carriers have put off the rate increase plan this week. The actual increase was less than $100/FEU. Market participants revealed that annual service contract negotiation this year is not positive, and the general increase is below expectation. On May 24, the CCFI showed that the freight index of USWC and USEC service quoted at 1106.10 points and 1217.04 points, almost unchanged from last week. Meanwhile, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of USWC and USEC marked $2093/FEU and $3254/FEU respectively, up 4.0% and 2.7% from last week. Local political turbulence continued to dent demand on the Persian Gulf service. Average slot utilization rate for Persian Gulf service and Red Sea service stayed around 80%. Rates are under pressure as slot utilization remained low and some carriers cut price to attract cargoes. On May 24, the SCFI showed that the freight index of Persian Gulf service quoted at $873/TEU, down 5.0% from last week. On the Japan service, volume slightly tumbled this week. Average slot utilization rate for ships from Shanghai to Japan slid to under 70%. Rates also plunged. On May 24, the CCFI showed that the freight index of China/Japan service marked 742.96 points, down 1.5% from last week. |
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