CCFI Commentary Issue 47, 2012

Weekly Report of China Export Container Transport Market Weak Demand Forced Carriers to Mull Year-End Rate Restoration China exports box market felt the chills of winter season this week. To maintain the utilization, carriers widely used low-rate strategy to canvass cargoes. However, such efforts can’t reverse the downside. Therefore, lines are mulling rate increases on many trade lines to gain the lost ground. The Persian Gulf and Red Sea service took the lead, where rates surged by over $200/TEU in average this week. On Nov. 30, the China Containerized Freight Index (CCFI) issued by Shanghai Shipping Exchange (SSE) stood at 1,129.90 points, down by 1.3% from last week; while the Shanghai Containerized Freight Index (SCFI) quoted at 1,082.82 points, almost unchanged from last week. Demand fell sheer on the Europe and Mediterranean service during the slack season. Moreover, the decline of demand well outpaced the contraction of capacity. The average slot utilization rate of ships leaving Shanghai for ports in North Europe struggled to maintain 70%. The utilization was even as low as 60% on the Mediterranean service. Carriers’ announcement of capacity cut this week failed to stop the rates from falling back to the level before increased ahead of November. On Nov. 30, the CCFI showed that the freight index of Europe and Mediterranean service marked at 1,456.03 points and 1,246.80 points, respectively down by 2.9% and 3.5% against last week. Considering the weak condition, some carriers postponed the rate increase plan by Mid-Dec. In the North America service, the labor union of office staffs in LA-LB ports organized strike on Nov.28 local time with the support of local stevedores, which disrupted most terminal operations in two ports. Many lines had to adjust the schedule temporarily. The average slot utilization rate of the USWC service quoted at below 80% this week and rates continued to drop. On Nov. 30, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of USWC stood at $2,046/FEU, down by 2.1% from a week ago. Liftings on the USEC service were also weak, where the average slot utilization rate hit around 80% and rates kept slip. On Nov. 30, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of USEC tumbled by 1.5% to $3,099/FEU. The Australia and New Zealand service is about to head into the slack season, where the average slot utilization rate reported at 90% below as demand declined. Rates went down this week again in a slower pace. On Nov. 30, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of Australia and New Zealand marked at $1,001/TEU, down by 3.3% against a week ago. On the Persian Gulf and Red Sea service, demand slid further as the social unrest in destination market. The average slot utilization rate decreased to around 60% this week. To restore rates, most carriers carried out the rate increase plan. As a result, the booking rates hiked over $200/TEU in average this week. On Nov. 30, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports in this region surged by 37.9% to $863/TEU. Exports of Christmas goods have almost finished on the China/South American trade. Individually, the average slot utilization rate of the SAWC service slid to about 90%. The SAEC service was relatively robust, with the utilization still staying 90% above. On Nov. 30, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of South America dropped by 1.5% to $2,094/TEU, 　　 Volume from Shanghai to Japan ports rose this week. Ships leaving Shanghai for Japan can be 70%-plus filled. Rates fluctuated slightly this week. On Nov. 30, the CCFI showed that the freight index of this service stood at 789.02 points, down by 1.4% comparing with last week.