Weekly Report of China Export Container Transport Market

CCFI Commentary in Issue 48, 2012

Rates Dived Widely since Weak Demand

As Christmas shopping spree starts in China and western markets, China exports box market has headed into slack season in overall.

Without volume support, utilization remained at a low level and rates on major trades continued to dive. On the Persian Gulf and Red Sea service, the rate surged significantly last week, but plunged this week.

On Dec.7, the China Containerized Freight Index (CCFI) issued by Shanghai Shipping Exchange (SSE) stood at 1106.28 points, down by 2.1% from last week; while the Shanghai Containerized Freight Index (SCFI) marked 1052.99 points, down by 2.8% from last week.

On the Europe trade, volume shrank during the slack season, leaving the average slot utilization rate of service from Shanghai to Europe just around 70% with weakening spot rates.

In contrast, at least one carrier engaging in Mediterranean service axed massive capacity this week, helping the utilization rebound to over 85%.

Nevertheless, oversupply is still out there and rates continued to decline this week, hitting as low as $600/TEU in some cases.

On Dec.7, the CCFI showed that the freight index of Europe and Mediterranean service marked at 1412.29 points and 1177.11 points, respectively down by 3.0% and 5.6% against last week.

To restore rates, many lines are planning to lift rates since from mid-Dec. with an increase of $500/TEU

The impact of the strike in USWC ports that lasted one week have eased, so volume are gradually picking up on the North America service.

In the past two week, the average slot utilization rate for the USWC service remained at around 80%.

On Dec.7, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of USWC stood at $2019/FEU, down by 1.3% from a week ago.

According to statistics, trading volume in LA-LB ports accounts for 40% of the total volume in U.S. Affected by the strike, ships in laden were unable to call terminals to discharge boxes, which resulted in economic losses estimated $1billion per day.

Volume on the USEC service was stronger than that on USWC service, with the average slot utilization rate hitting above 80%.

Rate decline slowed on the North America service, and carriers have to delay rate adjustment plan as the approach of rate increase in mid-Dec.

On Dec.7, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of USEC stood at $3071/FEU, almost unchanged from last week.

According to insiders, although the end of strike in USWC ports, workers in USEC ports are planning to strike at the end of this month.

On the Australia and New Zealand service, due to the low demand during the slack season and carriers’ reluctance to contract capacity, the average slot utilization rate of this service fell below 80% and rates declined at a quicker pace this week.

On Dec.7, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of Australia and New Zealand marked $954/TEU, down by 4.7% against a week ago. This compared to a decline of 3.3% last week.　The Australia and New Zealand component of CCFI also fell, down by 1.6% from last week to1072.73 points.

Carriers collectively lifted rates for boxes from Asia to Persian Gulf last week, despite the insufficient cargo. The achievement of last week’s rate increase was partly eroded with rate of utilization hovering around 60%.

On Dec.7, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports in this region plummeted by 13.2% to $749/TEU.

Volume on the South America trade shrank this week. Some carriers started to carry on winter capacity adjustment. As a result, the average slot utilization rate of ships leaving Shanghai for ports in South America rebounded back above 80% with falling spot rates.

On Dec.7, the SCFI showed that the freight rate (covering seaborne surcharges) of service from Shanghai to base ports of South America dropped by 1.9% to $2055/TEU. The South America component of the CCFI saw a 1.1% week-on-week decrease to 1097.28 points.

On the Japan trade, volumes out of Shanghai rose moderately this week, with the average slot utilization rate of ships from Shanghai to Japan standing above 75% with stable spot rates.

On Dec.7, the CCFI showed that the freight index of this service quoted at 790.90 points, almost unchanged from last week.