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CCFI Commentary Issue 39, 2017

  Freight Rates Slip under Pressure

  China export box transport demand keeps stable in general, where competition among box liners stiffens and spot rate slip. On Sep.22, Shanghai Containerized Freight Index (SCFI) issued by Shanghai Shipping Exchange (SSE) quotes 735.91 points, falling by 5.0% from last week.

  Economy in Euro zone has a slower recovery, which hits cargo volume in the Europe route, where the average slot utilization rate tumbles to 85%-90%. In order to maintain market share, box liners reduce freight rate, causing spot rate falling. On Sep.22, freight rate in the Shanghai-Europe route (covering seaborne surcharges) quotes USD734/TEU, down by 4.6% from last week. In the Mediterranean route, the average slot utilization rate is 80%-85%, and spot rate fails to keep stable. On Sep.22, freight rate in the Shanghai-Mediterranean route (covering seaborne surcharges) has a week-on-week slip of 2.9% to USD709/TEU.

  Transport demand ahead the destination keeps hot, which spurs China export box transport cargo volume in the North America route, where the whole market performs well. The average slot utilization rates in the USWC and USEC routes even 100%. As the coming of Chinese National Holiday, cargo owners make shipment in advance, and most box liners decrease freight rate to attract more cargo volume, leading spot rate diving. On Sep.22, freight indices in the routes from Shanghai to USWC and USEC (covering seaborne surcharges) issued by USD1484/FEU and USD2105/FEU, declining by 6.4% and 7.2% from one week ago.

  In the Persian Gulf route, market has a flat performance, but the oversupply of capacity worsens. The average slot utilization rate leaving off Shanghai Port is 75%-80%. As the lower of loading rate, some box liners take measures to limit capacity, and reduce freight rate by USD50-100/TEU to attract cargo volume, leading spot rate tumbling. On Sep.22, freight rate in the Shanghai-Persian Gulf route (covering seaborne surcharges) has a week-on-week decrease of 10.5% to USD376/TEU.

  In the Australia route, transport demand keeps hot and the average slot utilization rate remains above 95%, with some even full-loaded. as the good performance of demand/supply condition, some box liners increase freight rate, supporting spot rate going north. On Sep.22, freight rate in the Shanghai-Australia/New Zealand route quotes USD730/TEU, up by 2.2% from one week ago.

  The main economies including Brazil and Argentina see economy recover stably, which supports transport demand in the South America route, where the average slot utilization rate leaving off Shanghai Port remains around95%. However, as box liners strive to lock market share with lower freight rate, competition tightens, leading booking rate slip. On Sep.22, freight rate in the Shanghai-South America route (covering seaborne surcharges) has a week-on-week slip of 9.8% to USD1886/TEU.

 
 
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