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.