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.