CCFI Commentary Issue 34, 2017

  Freight Rate Fails to Grow

  Aug.25--China export box transport market sees demand stable, but as competition stiffens, freight rate increase plan in many routes are cancelled, leading spot rate and the comprehensive index slip. On Aug.18, Shanghai (Export) Containerized Freight Index (SCFI) issued by Shanghai Shipping Exchange (SSE) quotes 859.92 points, down by 2.1% against one week ago.

  As Euro zone economy recovery speed keeps stable, transport demand is stable in the Europe route. Both the average slot utilization rates in the Europe and Mediterranean routes stand above 90%. Owing to the large scale on the market, capacity is still over-supplied, and most box liners choose to reduce freight rate slightly, resulting in spot rate a narrow slip. On Aug.18, freight rates in the routes from Shanghai to Europe and Mediterranean (covering seaborne surcharges) quote USD918/TEU and USD831/TEU, falling by 1.4% and 2.1% from one week ago respectively.

  Transport demand in the destination is hot, which boosts export from China and improves the demand/supply condition in the North America route. As holding different attitudes towards post market, box liners carry out different measures, leading spot rate ups and downs. On Aug.18, freight rate in the routes from Shanghai to USWC and USEC (covering seaborne surcharges) quote USD1659/FEU and USD2592/FEU, up by 1.1% and down by 1.1% from one week ago respectively.

  The Persian Gulf route sees cargo volume flat, capacity still over-supplied. The average slot utilization rate leaving off Shanghai Port remains around 80%, with some even below 75%. Owing to the lower loading rate, box liners reinforce to reduce freight rate, leading freight rate decreasing by USD100-200/TEU and spot rate having a large slip. On Aug.18, freight rate in the Shanghai-Persian Gulf route (covering seaborne surcharges) quote USD548/TEU, tumbling by 13.4% from one week ago.

  In the Australia route, transport demand keeps stable, and the average slot utilization rate leaving Shanghai Port remains around 90%. Owing to the stable demand/supply condition, most box liners hold stand-by attitude, with spot rate stable. On Aug.18, freight rate in the Shanghai-Australia route (covering seaborne surcharges) quotes USD489/TEU, down by 0.8% comparing with one week ago.

  Owing that economy is improving in the destinations including Brazil and Argentina, transport demand grows firmly in the South America route, where demand/supply condition keeps well and the average slot utilization rate remains above 95%. However, box liners reduce booking rate one by one for the sake of market share. On Aug.18, freight rate in the Shanghai-South America route (covering seaborne surcharges) has a week-on-week decrease of 4.6% to USD2843/TEU.


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