CCFI Commentary Issue 18, 2012

Weekly Report of China Export Container Transport Market (CCFI Commentary in Issue 18, 2012) Demand and Comprehensive indices stay stable China export box market went steady this week, with demand remaining stable on key oceangoing routes and comprehensive indices inched up slightly. On May 4th, the China Containerized Freight Index issued by Shanghai Shipping Exchange stood at 1,263.95 points; while the Shanghai Containerized Freight Index issued by SSE was reported 1,501.46 points, both almost without change against last week. Volume was almost stationary in the Europe trade, but carriers recently added more tonnage to the market, enlarging supply and demand imbalance, where the average slot utilization rate slid to around 85%. Carriers failed to carry out a rate increase in full amount in the first 10 days of May. On May 4th, the freight rates plus surcharges from Shanghai to base ports of Europe and Mediterranean issued by SSE increased 2.4% and 2.8% respectively to $1,934/TEU and $2,033/TEU. Insiders said, pushed altogether by carriers, last week saw rates went a big stride, up nearly $1,200/TEU since the end of Feb., having topped the increase amount during the same period over the years. From this point of view, most of voyages have recovered onto the break-even-point. Therefore, many lines shifted their emphasis from on the service profit to the market share expansion and started to relax tonnage supply. However, other market players expressed while demand went up clearly from Q2, its rise speed still couldn’t catch up the pace of tonnage increase as mass new ships would be delivered. If lines put lots of ships into the market, rates will face much down pressure, with the weak supply-demand relation. In the North America service, although demand continued to rise since April, the scale of tonnage climbed up obviously as some lines created sets of routes and relaxed slot booking, thus the average slot utilization rate of the USWC service declined to 90%. Hence, rates went down slightly. On May 4th, the freight index of China export to USWC route issued by SSE stood at 1,032.99 points, down 0.6％ from last week. There was put less tonnage into the USEC service, so the average slot utilization rate kept above 95% and some services saw rates lift up further. The freight index of China export to USEC route issued by SSE stood at 1,259.50 points, up 0.6％ from last week. Insiders said that main lines announced to lift the control over tonnage supply from the start of May, which increased the down pressure on rates and to some degree disorganized the rate rise plan from the mid-May. It is reported that many box lines have deterred to hike rates further, when to exercise the rate lift plan depending on the future market. In the Persian Gulf service, volume was in line with the level last week. Rates kept stable, with the average slot utilization rate maintaining at around 85%. On May 4th, the freight rate plus surcharges from Shanghai to base ports of the Persian Gulf issued by SSE stood at $1,603/TEU, almost no change from last week. The Australia and Singapore service saw a quiet market in demand this week, where the average slot utilization rate was just around 80%. Many lines decided to lower rates for cargo. On May 4th, the freight index of Shanghai export to Australia and Singapore route issued by SSE stood at 1,025.78 points, down 1.6％ from last week. Demand continued to decline in the South America service and there was no clear contraction on tonnage supply, where rates plunged further. On May 4th, the freight index of China export to South America service issued by SSE stood at 957.94 points, down 3.6％ from last week. Volume slipped a bit in the Japan service this week, with the average vessel utilization from Shanghai to Japan ports lingering at around 75%. Nevertheless, spot rates remained steady. On May 4th, the freight index of China export to Japan service issued by SSE stood at 795.50 points.

CCFI Commentary Issue 17, 2012

Weekly Report of China Export Container Transport Market (CCFI Commentary in Issue 17, 2012) Europe and the Mediterranean rate hike buoyed indices China export box market saw a firm-up in demand this week, with volume remaining stable on many oceangoing routes.　Comprehensive indices continued to rise, supported by the rate increases in the Europe and the Mediterranean trades. On Apr. 27th, the China Containerized Freight Index issued by Shanghai Shipping Exchange stood at 1,263.10 points, significantly up 4.0% from last week; while the Shanghai Containerized Freight Index issued by SSE surged 4.3% to 1,488.14 points. Volume was almost stationary in the Europe trade, where the average slot utilization rate stood at around 90%. Spot rates of this route rose remarkably this week as most carriers will carry out a rate increase on May 1st. On Apr. 27th, the freight indices of the Europe and the Mediterranean services issued by SSE increased 3.3% and 3.2% respectively to 1,742.47 points and 1,891.79 points. In the North America service, demand was stable and the average slot utilization rate stayed at around 95%. However, rates went up and down slightly. On Apr. 27th, the freight rates plus surcharges from Shanghai to base ports of USWC and USEC issued by SSE stood at $2,414/FEU and $3,558/FEU, both barely changed from last week. It is reported that many box lines have announced to hike rates further due to the higher cost of labor and fuel bills. The latest news is that lines will push through a rate increase in mid-May, with the average increase of $400/FEU. Although lines are optimistic about the rate rise in transpacific trade, some insiders still reveal that it remains to be seen whether the increase can achieve the level lines are seeking and be sustainable, as the prevailing rates have soared significantly after several similar increases and the oversupply still exists in this marketplace. In the Persian Gulf service, volume was in line with the level last week. Spot rates soared this week as shippers rushed to export before lines raise rates on May 1st.　 On Apr. 27th, the freight rate plus surcharges from Shanghai to base ports of the Persian Gulf issued by SSE rose sharply by 10.4% from last week to $1,612/TEU. The Australia and Singapore service saw a modest dip in demand this week, where the average slot utilization rate was just under 80%. Rates continued to fall.　On Apr. 27th, the freight rate plus surcharges from Shanghai to base ports of the Australia and Singapore issued by SSE tumbled strikingly 9.0% from last week to $1,022/TEU. Analysts told shippers’ interests in export faded after the rate increase in mid-April, thus the demand/supply situation reversed in the short run. As a response, lines are scrambling to attract shippers by reducing rates. Demand also started to decline in the South America service, where rates plunged. On Apr. 27th, the freight rate plus surcharges from Shanghai to base ports of South America issued by SSE plummeted 8.9％from last week to $1,456/TEU. Lines pushed through successive rate increases since the start of this year. However, demand failed to rise sharply and capacity couldn’t be absorbed fully. The imbalance of demand and supply made the rate develop downward. Volume slipped in the Japan service this week, with the average vessel utilization from Shanghai to Japan ports reducing to around 70%. Nevertheless, spot rates remained steady. On Apr. 27th, the freight index of the Japan service issued by SSE marked at 804.35 points, almost no change from last week.

CCFI Commentary Issue 16, 2012

Weekly Report of China Export Container Transport Market (CCFI Commentary in Issue 16, 2012) Demand remained stable in the China export box market this week. Comprehensive indices made correction, with the development of rates for oceangoing routes differing slightly. On Apr. 20th , the China Containerized Freight Index issued by Shanghai Shipping Exchange stood at 1,214.69 points, rose 1.3% from last week; while the Shanghai Containerized Freight Index issued by SSE marked at 1,426.23 points, almost unchanged from last week. In the Europe trade, volume didn’t change much against last week, where the average slot utilization rate stayed at around 90%, however, rates continued to spiral down. On Apr. 20th, the freight rate plus surcharges from Shanghai to base ports of Europe issued by SSE dropped 2.1% to $1,708/TEU. Market sentiments are skeptical about the range and sustainability of the rate increase on May 1st based on the following reasons. Rates have been at relatively high after lines fully implemented two rounds of rate restoration in March and April.　 In addition, the supply and demand situation deteriorated further. According to Clarksons, 20 boxships, or 0.194m TEU, will be delivered in May. Of these, 13 are ships above 8,000 TEU, equivalent to 0.167mTEU in terms of capacity, which made the record of deliveries of ships above 8,000 TEU in a single month. Undoubtfully, the massive new added capacity would put the rates under pressure. Furthermore, box lines shifted their focus to profitability from the fundamentals of supply and demand when they set the price. All those above made rates correct recently. However, it is sure that an export rush will come in late April because of the expected rate increase in May. Demand slightly rose in the North America service this week, boosted by the successive news of rate increase recently. Both USWC and USEC services were reported almost full-slots. Rates for boxes from Shanghai to USWC ports have gone up to $2,400/FEU after three successful rate increases from the start of this year. This compared to the $1,600/FEU in late December last year. The pick-up of rates gives lines some bargain chips when they negotiate annual service contract with shippers. On Apr. 20th, freight indices of the USWC and USEC services issued by SSE rose 2.4% and 1.9% respectively, to 993.14 points and 1,209.93 points. As retailers geared up imports to restock, the throughput of ports in the USWC soared in March. In the Australia and Singapore service, the average slot utilization rate fell below 90% as demand cooled this week. However, rates were basically stable because lines were determined to push through the rate increase on Apr. 15th.　 On Apr. 20th, the freight rate plus surcharges from Shanghai to base ports of the Australia and Singapore issued by SSE marked at $1,123/TEU, almost unchanged from last week. Volume inched up in Japan service this week, where the average slot utilization rate climbed above 75%. Rates remained stable. On Apr. 20th, the freight index of the Japan service issued by SSE was reported at 805.30 points, almost the same as last week. Experts now expect that some positive signs, including the recovery of manufacturing industry, the reconstruction of economy and the rising consumer spending in Japan, will effectively drive the resurgence of foreign trade and economy of this country, thus giving support to sea freight rates.

CCFI Commentary Issue 15, 2012

Weekly Report of China Export Container Transport Market (CCFI Commentary in Issue 15, 2012) Demand on the rise, as well as the indices China export box market generally firmed up this week, with the demand on the ocean-going routes rising moderately. The comprehensive indices continued their upward trend. On Apr. 13, the China Containerized Freight Index issued by Shanghai Shipping Exchange stood at 1,198.87 points, surged 2.0% from last week; while the Shanghai Containerized Freight Index issued by SSE rose by 3.1% to 1,416.87 points. Volume remained stable in the Europe trade this week, with the average slot utilization rate staying at around 90%. However, rates started to ease back. On Apr. 13th, the freight rate plus surcharges from Shanghai to base ports of Europe issued by SSE dropped 1.5% to $1,744/TEU. The tighter space supply in the Mediterranean trade made the average slot utilization rate of this route stay at higher 95%, and some ships leaving for East Mediterranean and Black Sea were even reportedly full-loaded. Rates for this trade kept steady. On Apr. 13th, the freight rate plus surcharges from Shanghai to base ports of Mediterranean issued by SSE marked at $1,762/TEU, almost no change from last week. Alphaliner estimates that the overall loss of the box shipping industry amounted to over $6 billion in 2011 because of the factors including overcapacity, rise of bunker cost and lower rates, resulting in most lines falling into financial troubles. To repay the debt, cope with the high oil price, maintain the business operation and pay the money of newbuildings, global lines need up to $20 billion in the short term. As the seasonal downturn of the Europe and Mediterranean comes to an end, demand is expected to return to the upward track. Furthermore，given the capacity cut measures taken by lines since the start of 2012 works, lines are planning a third general rate increase in the Asia/Europe trade, hoping this move can lift the rate revenues and help lines turn to black in Q2. It is known that many lines have announced to raise rates again since May 1st, with the increase between $300/teu-$500/teu. However, observers said the current rate level is relatively high, once the target of rate increase in May is fully achieved, rate will be over the historic peak in 2010. Given the lower percentage of idle capacity accounting for the global fleet than 2010 and the pressure brought by the large new deliveries, the supply and demand situation needs to be improved in the future. If carriers fail to control the capacity effectively in Q2, the rate increase is likely to be restrained. Demand is on the rise in the North America service. Additionally, lines pushed through several rounds of rate increase recently, which urged some shippers to export their goods ahead of schedule. Hence, volume buoyed this week, with the average slot utilization rate for the USWC service climbing above 95% and the figure for UCEC service being close to 100%. Rate remained mainly stable this week. On Apr. 13th, freight indices of the USWC and USEC services issued by SSE remained almost unchanged from last week and marked at 969.48 points and 1,187.42 points respectively. Some lines are reportedly planning to add capacity from early May in the transpacific trade to deal with the increasing demand. Driven by the rising demand, the market condition of the Australia and Singapore service was significantly improved, where the average slot utilization rate climbed above 90%. Encouraged by the big rate increase in the Asia/Europe trade, lines operating in the Australia and Singapore service announced to lift the rate again from mid April, with the increase of $200/teu. Therefore, the spot rates for this trade surged remarkably this week. On Apr. 13th, the freight rate plus surcharges from Shanghai to base ports of the Australia and Singapore issued by SSE jumped up by 14.5% from last week to $1,123/TEU. Japan service saw that volume decreased significantly, with the average slot utilization rate of service from Shanghai to Japan ports dropping to around 65%. Rates generally held up. On Apr. 13th, the freight index of the Japan service issued by SSE was reported at 809.69 points, almost the same as last week.