CCFI Commentary Issue 06, 2017

  Freight rates in the ocean-going route tumble

  China export box transport market sees demand on the rising trend, but the fast recovering speed of capacity hits supply/demand condition. Freight rates in the ocean-going route tumble and the comprehensive index decreases further. On Feb.17, Shanghai Containerized Freight Index (SCFI) issued by Shanghai Shipping Exchange quotes 830.46 points, tumbling by 6.3% against one week ago.

  As the growth of destination economy and the stable increase of consumption demand, transport demand in the Europe route has a good performance. However, owing to the gradual recovery of services, supply/demand condition has no improvement, and the average slot utilization rate remains between 85%-90%. Nevertheless, as the faster recovery speed of cargo volume, box liners are more confident towards the post market, and booking rate is declined. On Feb.17, freight rate in the Shanghai-Europe route (covering seaborne surcharges) quotes USD858/TEU, a week-on-week decrease of 6.0%. In the Mediterranean route, regional economies including Greece and Italy are uncertainty, and the whole cargo volume performs weaker than that in the Europe route. However, under the support of stock of cargo volume by box liners, the supply/demand condition remains stable, and spot rate tumbles slightly. On Feb.17, freight rate in the Shanghai-Mediterranean route (covering seaborne surcharges) quotes USD844/TEU, falling by 3.7% from one week ago.

  Owing to the healthy economy condition, transport demand has a good performance, and both the average slot utilization rates in the USWC and USEC routes recover to around 90%. However, as the good expect on the market, box liners reinforce to reduce freight rate for the sake of market share, leading spot booking rate tumbling faster. On Feb.17, freight rates in the routes from Shanghai to USWC and USEC (covering seaborne surcharges) quote USD1771/FEU and USD3214/FEU, decreasing by 9.8% and 7.0% from one week ago respectively.

  Cargo volume has a good recovery in the Persian Gulf route, where the average slot utilization rate remains above 90%. Owing to that supply/demand condition sustains at the relatively high level, the average booking rate decreases by less than USD50/TEU despite during the slack season. On Feb.17, freight rate in the Shanghai-Persian Gulf route (covering seaborne surcharges) quotes USD578/TEU, falling by 5.1% against one week ago.

  Transport demand is vulnerable in the Australia/New Zealand route, where the average slot utilization rate is even below 50%. For the excess vessel space, box liners carry on reducing freight rate, with spot rate declining depressively. On Feb.17, freight rate in the Shanghai-Australia/New Zealand route (covering seaborne surcharges) has a week-on-week decrease of 13.3% to USD572/TEU.

  In the South America route, transport demand is flat, and demand/supply condition tends to be weak. As a result, most box liners withdraw freight rate increase plan and begin to reduce booking rate. Some box liners are forced to decrease freight rate, leading spot rate tumbling heavily. On Feb.17, freight rate in the Shanghai-South America route (covering seaborne surcharges) quotes USD1756/TEU, falling by 10.4% from one week ago.

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