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| CCFI Commentary Issue 23, 2013 |
| Weekly Report of China Export Container Transport Market (CCFI Commentary in Issue 23, 2013) Rates surged on Mediterranean service despite exports remained stagnant “Stable” was the keynote of China export box market this week. However, imbalanced supply and demand seemed to be deteriorated due to the influx of capacity on some routes and weaker-than-expected traditional peak season. Carriers had to cut price to secure market shares, as a result, rates on most services dropped again this week. But the Mediterranean service and Persian Gulf service were the exception. Rates of these two trades bucked the trend and surged as the June 1 general rate increase (GRI) was carried out. It contributed to the rise of SCFI this week. On May 31, the China Containerized Freight Index (CCFI) issued by Shanghai Shipping Exchange (SSE), the representation of the whole market, stood at 1035.04 points, down 2.2% from last week, while the Shanghai Containerized Freight Index (SCFI), the mirror of the spot market, gained 2.3% to 1013.71 points this week. There was no sign of improvement on supply/demand fundamentals on the Europe trade as economy remained weak there. To cope with continuous low load factors, carriers waged price war to secure their market shares. In some cases, rates have fallen as low as $500/TEU. On the supply side, carriers adjusted capacity to pave the way for the June GRI. The average slot utilization rate for services from Shanghai to Europe stood at around 80% this week. On May 31, the SCFI showed that the freight rate (covering seaborne surcharges) of Europe service plunged 6.7% from last week to $598/TEU, the lowest level since the beginning of this year. On the Mediterranean service, most carriers launched GRI on the first day of this month, and the real increase was just a little lower than previously announced, which partly contributed to relatively high vessel utilization for this service. On May 31, the SCFI showed that the freight rate (covering seaborne surcharges) of Mediterranean service significantly jumped 58.8% from last week to $1207/TEU. Despite positive indicators of economy in U.S., it didn’t bring substantial volumes. Instead, volumes from some major shippers fell. Market participants suggested that the result of annual transpacific service contract negotiations turned out to be unsatisfactory this year. Carriers are cautiously optimistic about this market in the rest of this year, with some having put off the planned rare restoration. The average slot utilization rate for services from Shanghai to USWC stayed around 85%. New services via the Suez Canal to USEC brought bigger modern vessels to the USEC market. This combined with new-added capacity on existing services, putting a greater pressure on rates. On May 31, the CCFI showed that the freight index of USWC service and USEC service respectively stood at 1093.03 points and 1222.76 points, both almost unchanged from last week. Volumes rose slightly on the Persian Gulf service this week. The average slot utilization rate for services from Shanghai to Persian Gulf bounced back to around 90%. With the support of volumes, the June 1 GRI had a sound effect. On May 31, the SCFI showed that the freight rate (covering seaborne surcharges) of Persian Gulf service gained 11.6% from last week to $974/TEU. Growing capacity dented the recovery of South America service. However, decline slowed as rates have hit a record low in last two years. On May 31, the CCFI showed that the freight index of China/ South America service marked 800.47 points, almost unchanged from last week. It represented a decrease of 11.4% from last month. The Japan service saw some pick-up in volume this week. The average slot utilization rate for ships from Shanghai to Japan was just over 70% and rates remained steady. On May 31, the CCFI showed that the freight index of China/Japan service quoted at 739.31 points, barely changed from last week. |
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