CCFI Commentary in Issue 46, 2012

Weekly Report of China Export Container Transport Market SCFI dived during the slack season China exports box market witnessed another sluggish week. As the traditional slack season comes, carriers cut rates aggressively to maintain the utilization, which dragged rates down. On Nov. 23, the China Containerized Freight Index (CCFI) issued by Shanghai Shipping Exchange (SSE) stood at 1,144.98 points, down by 0.7% from last week; while the Shanghai Containerized Freight Index (SCFI) dived by 5.1% to 1,077.34 points. Despite active capacity cut by lines, such moves failed to bring a relief on the Europe trade. Demand was slack when winter came in the Northern Hemisphere. The average slot utilization rate just hovered at around 70% this week. Meanwhile, rates went down further, which have fallen by $400/TEU since the beginning of this month. On Nov. 23, the CCFI showed that the freight index of Europe service stood at 1,499.28 points, down by 1.3% from last week. On the Mediterranean market, demand growth was dented by the seasonal factor and weak economy in Southern Europe. To cope with the lack of volume during the winter, lines strengthened the management on capacity, for example, CKYH alliance announced that its members would suspend 7 Asia/Mediterranean sailings from Nov to mid-Jan next year. It collided with G6’s similar move to carry on slow steaming on 3 routes connecting Asia and North Europe /Mid East. CKYH’s cut moved about 21% of the total capacity the alliance deployed on the Mediterranean service, which helped the average slot utilization rate of this tradelane rebounded back to around 70%. On Nov. 23, the CCFI showed that the freight index of Mediterranean service marked at 1,292.30 points, down by3.4% from last week. On the North America service, demand was slack as the trade had head into slack season. The average slot utilization rate for the USWC service was less than 80% and rates continued to slide. On Nov. 23, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of USWC stood at $2,089/FEU, down by 6.1% from last week. It is said some lines started to launch slow steaming to absorb excess capacity. The USEC service fared better as lines took stricter discipline on capacity on this service. However, the average slot utilization rate still recorded a marginal decline this week, standing at around 85%. Rates also declined. On Nov. 23, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of USEC stood at $3,146/FEU, down by 3.1% from last week. TSA members decided to lift rates by $400/FEU from next month as they tried to laid a firm foundation for the upcoming annual contract negotiation. On the Australia and New Zealand service, demand was hit by seasonal factors and strike prevailing in New Zealand ports, where the average slot utilization rate fell below 90% and rates slumped this week. On Nov. 23, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of Australia and New Zealand stood at $1,035/TEU, 4.3% lower than last week. Political turbulences continued to affect the volume on the Persian Gulf and Red Sea service, where the average slot utilization rate declined to around 60% and rates sagged. On Nov. 23, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of this region dropped by 11.8% to $626/TEU, the lowest level in last 3 months. This compared to the decline of 3.5% last week. Lifting on the Japan service grew firmly this week. Ships leaving Shanghai for Japan can be 70%-plus filled. Rates remained stable. On Nov. 23, the CCFI showed that the freight index of this service stood at 776.42 points, almost unchanged from last week.