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.