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.