CCFI Commentary Issue 46, 2017


  Demand and Freight Rate Slip

  China Export box transport market sees demand slip. Cargo volume and freight rate decline in most ocean-going routes, except for the Australia/New Zealand route, with the comprehensive index slip. On Nov.17, Shanghai (Export) Containerized Freight Index (SCFI) issued by Shanghai Shipping Exchange (SSE) quotes 734.15 points, down by 6.1% from one week ago.

  Economy in the euro zone has a stable recovery, but as the approach of the Christmas holiday, most cargo volume slow down shipment space, leading cargo volume slip. The average slot utilization rate in the Europe route decreases to 85%-90%, and that in the Mediterranean route tumbles to 70%-80%, with capacity still over-supplied. As a result, part of box liners, in order to maintain their market shares, reduce freight rate one by one, leading spot rate diving. On Nov.17, freight rates in the Shanghai to Europe and Mediterranean routes (covering seaborne surcharges) quote USD689/TEU and USD595/TEU, slip by 5.4% and 3.9% comparing with one week ago respectively.

  In the North America route, transport demand is dragged down by the weak local consumption. As the slack season comes earlier, cargo volume slip and the average slot utilization rate keeps around 90%. Most box liners reduce freight rate aiming to attract cargo volume, leading spot rate tumbling continuously. On Nov.17, freight rate in the routes from Shanghai to USWC and USEC (covering seaborne surcharges) quote USD1249/FEU and USD1801/FEU, down by 11.5% and 6.1% from one week ago respectively.

  For the weak demand in the destination, cargo volume has no improvement in the Persian Gulf route. Despite some box liners taking measures to limit capacity, the excess supply of capacity still worsens, leading the average slot utilization rate hovers around 85%. For the excess supply of vessel spaces, competition stiffens and spot rate tumbles. On Nov.17, freight rate in the Shanghai-Persian Gulf route (coverings seaborne surcharges) has a week-on-week decrease of 14.9% to USD410/TEU.

  Supported by the cargo volume before the Christmas Day, ship space is short-supplied in the Australia/New Zealand route, where the average slot utilization rate sustains above 95%, with some even 100%. For the hot demand, some box liners hike booking rate, causing spot rate rising firmly. On Nov.17, freight rate in the Shanghai-Australia route (covering seaborne surcharges) has a week-on-week increase of 4.0% to USD1362/TEU, surging by 92.4% comparing with end Sep.

  In the South America route, transport demand keeps stable. Ship space in the East coast of this service is short-supplied, and the average slot utilization rate sustains above 95%, with some even full-loaded. Cargo volume in the west coast of this route declines, where the average slot utilization rate remains around 90%. Owing to the stiffened competition, freight rate begin to slip, leading spot rate decreasing. On Nov.17, freight rate in the Shanghai-South America route (covering seaborne surcharges) quotes USD2678/TEU, down by 8.4% against one week ago.

  Transport demand and spot rate keep stable in the Japan route. On Nov.17, freight index in the China-Japan route quotes 667.28 points.

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