CCFI Commentary Issue 04, 2012

Weekly Report of China Export Container Transport Market

(CCFI Commentary in Issue 04, 2012)
China export box market kept generally stable this week, with demand on deep-sea routes like U.S. and Europe services remaining strong, causing a tighter space condition. On Jan. 20th, the China Containerized Freight Index issued by Shanghai Shipping Exchange stood at 924.25 points, crept up 0.4% from last week; while the Shanghai Containerized Freight Index issued by SSE went up 0.2% to 982.56 points.

Although the export rushes ahead of the lunar New Year, making almost every sailing from China to Europe see full slots, continued, the approach of the holiday had started to weaken the volume, and then slowed the growth of rates. On Jan. 20th, the freight rate plus surcharges from Shanghai to base ports of the North Europe issued by SSE rose just 0.5％ to $737/TEU, while the all- in rate for the Mediterranean service surged 0.9% to $779TEU.

It seemed that industry insiders held a consensus that the outlook of the Europe service in 2012 would be bleak. In the short term, as it took some time for factories in Asia to reopen，the fall of demand in February could soften the rates; In the medium-long term, the continued debt crisis in Europe, which may affect the demand of this continent, together with the increasingly fierce competition between new-formed mega alliances could bring problems of overcapacity and lower rates.　

The effect of pre-holiday export rush didn’t fade on the North America service, with ships leaving Shanghai for ports along USWC and USEC almost full loaded this week. However, the growth of rate slowed as the space ahead of the lunar New Year become unavailable. On Jan. 20th, the freight indices of services from China to USWC and USEC issued by SSE stood at 910.86 points and 1,123.37 points, up 2.1% and 0.8% respectively from a week ago.

The moderate recovery of U.S. economy drove the trade and shipping demand. Alphaliner, a shipping consultancy, forecast recently that the growth rate of shipping demand on the Far East/U.S. trade this year could reach 4.6%, up 5.4% compared with last year.

Demand was still robust this week on the Persian Gulf service where sailings were seen full slots.Nevertheless, the previous rising trend tended to go flat this week as the effect of pre-holiday export rush diminished. On Jan. 20th, the freight index from China to the Persian Gulf issued by SSE marked at 806.66 points, barely changed from a week earlier.

According to CI, China Shipping, CMA CGM and UASC will launch a service connecting China and UAE, starting operation in February. The three lines announced that they would deploy more capacity on the services to Middle East market by adding transshipment service. Rate on these trades could be under pressure if cargo growth doesn’t match.The Australia and Singapore services saw all ships departing full-loaded this week. Due to the fall of demand during the 7-day holiday, however, some lines started to cut the price slightly. On Jan. 20th, the freight rate plus surcharges from Shanghai to base ports of the Australia and Singapore issued by SSE tumbled 0.6% from last week to $846TEU.

The volume maintained stable on the Japan service this week, where the average slot utilization rate from Shanghai to Japan reached above 85% and rate fell marginally. On Jan. 20th, the freight index of the Japan service issued by SSE was reported at 756.85 points, down 2.3% from last week.