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CCFI Commentary Issue 45, 2018

  Shipping demands generally stabilized with some route rates reduced

  In this week, transportation demand of China's export container shipping market was generally stable, and the freight rate of the main routes was differentiated. Some routes entered the off-season hence the freight rate was adjusted back, and the overall index generally fell. On November 23rd, Shanghai (Export) Containerized Freight Index (SCFI) issued by Shanghai Shipping Exchange (SSE) quoted 903.90 points, down by 5.0% from previous week.

  In the Europe route, the small peak of Christmas shipments came to an end, the shipments of cargo owners slowed down, and the market demand remained stable overall without a significant decline. This week, the average slot utilization rate ex Shanghai Port ships was about 90%. The supply and demand relationship of the route maintained balanced. Only some ship owners fine-tune the market freight rate according to their respective circumstances, and the spot market freight rate fluctuated slightly. On November 23rd, freight rate in the route from Shanghai to Europe (including seaborne related surcharges) quoted USD738/TEU, slightly up 0.4% from one week ago. In the Mediterranean route, market situation was slightly inferior to the European route, and the average slot utilization rate of ships ex Shanghai Port was 85~90%. Some of the ship owners’ booking prices have been adjusted slightly, with little margin. On November 23rd, freight rate in the route from Shanghai to Mediterranean (including seaborne related surcharges) quoted USD755/TEU, slightly down by 0.3% from last week ago.

  In the North America routes, the US University of Michigan consumer confidence index in November was 97.5, with an expected 98.3. And the US number of initial jobless claims for the week of November 17th was 224,000, and it was expected to only reach 215,000. Both figures were less than expected, shows that US employment and consumption slowed slightly, but they were still at a good level. Affected by Sino-US trade disputes, transportation demand continued to maintain a high level, and the relationship between supply and demand remained tense. In the USWC route, the average loading rate of Shanghai Port ships remained above 95%, and some ships are fully loaded and transported. Some of the ship owners placed overtime vessels to compete for market supply. The cargo volume was insufficient, and the market rate was under pressure. On November 23rd, freight rates in the routes from Shanghai to USWC (including seaborne related surcharges) quoted USD2247/FEU, down by 11.2% compared to last week. In the USEC route, the tight slot supply continued, and the average loading rate of ships in Shanghai Port was above 95%, and most shipments were fully loaded. The market freight rate has a large increase in the short-term, and most of the ship owners expected insufficient cargo volume in the market, hence they actively adjusted the freight rate. On November 23rd, freight rates in the routes from Shanghai to USEC (including seaborne related surcharges) quoted USD3652/FEU, down by 2.3% compared to last week.

  In the Persian Gulf route, the demand for routes was at a low level, and the market still had a large-scale capacity to suspend operations, and the supply-demand relationship was generally balanced. The average slot utilization rate of ships ex Shanghai Port was about 95%.On November 23rd, freight rate in the Shanghai to Persian Gulf route (including seaborne related surcharges) quoted USD513/TEU, down by 1.0% from previous week.

  In the Australia/New Zealand route, the route entered the traditional off-season. The market volume began to fall with the clearing of Christmas cargo. The supply of transportation capacity increased recently. The average slot utilization rate ex Shanghai Port fell to between 85% and 90%, and the relationship between supply and demand deteriorated. In order to maintain their respective market shares, most ship owners adopted a price reduction strategy, and the spot market freight rate fell under pressure. On November 23rd, freight rate in the Shanghai to Australia/New Zealand route (including seaborne related surcharges) quoted USD632/TEU, down by 6.4% against one week ago.

  In the South America route, the transportation demand was weak due to seasonal factors. At the same time, the capacity of the recent routes was enlarged, and the respective loading conditions of the ship owners were quite different. The average slot utilization rate ex Shanghai Port was between 70% and 90%. In terms of freight rates, some ship owners further lowered their booking rate, and the freight rate on the spot route dropped sharply. On November 23rd, freight rate in the Shanghai-South America route (including seaborne related surcharges) quoted USD996/TEU, down by 15.9% compared to last week.

  In the West Africa route, the transportation demand remained stable this week, the freight rate increased steadily in the near future, and the loading rate remained above 90%. On November 23rd, freight rate in the Shanghai-West Africa route (including seaborne related surcharges) quoted USD2581/TEU, up by 1.7% compared to last week.

  In the Japan route, the market volume was stable, the overall loading level of the ship owners was not very volatile, and the freight rate of the route was smooth. On November 23rd, freight index in the China to Japan route quoted 712.87 points.

 
 
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