Weekly Report of China Export Container Transport Market

(CCFI Commentary in Issue 41, 2010)

This week, the China export containerized transport market showed marginally sagged as the capacity increasingly swelled over the demand, pulling down the freight rate of most main services.

On October 15th, the China (Export) Containerized Freight Index issued by the Shanghai Shipping Exchange reported 1,153.17 points, down 3.7% from last week; while the Shanghai (Export) Containerized Freight Index quoted 1,301.31 points, down 5.4% from last week.

In Europe service, the slightly decreasing cargo volume affected the slot utilization. The freight rate showed a downward trajectory and averaged at USD 1,500-1,600/TEU. As for the Mediterranean service, the cargo volume was even less, and the freight rate dipped to USD 1,550/TEU. Pundits expected that the slump trend would prevail over the next few months due to the Christmas goods shipment rush had finished before the National Day of China while the capacity was still at a high level. Therefore, capacity surplus is expected to continue and will consequently trigger people's bearish sentiment for the next 3 months. On October 15th, the freight indices of Europe and Mediterranean services issued by the SSE reported 1,681.56 points and 1,752.35 points, respectively dived by 4.5% and 4.8% from last week.

The North America trade encountered a similar situation of the Europe market, where the cargo volume kept shrinking while the capacity remained ample. Although the cancellation of some voyages from Shanghai to US led to a few full-filled ships during the National Day holiday, still the slots remained quite spare as the slot utilization hovered around 80% this week. With signs of a downward cargo volume after the end of the Christmas goods shipment rush, most insiders hold a downbeat attitude to the market until the end of 2010. On October 15th, the freight rate (ocean freight plus surcharges) for the voyages from Shanghai to base ports in US west coast and US east coast issued by the SSE were USD 2,379/FEU and USD 3,797/FEU, respectively tumbled by 4.6% and 4.1% from last week.

The cargo volume kept stable in Australia and Singapore service, but the freight rate only stood at about USD 1,000/TEU because of the weakening market condition. Christmas goods are still being carried, which is expected to last to November, since the route is far shorter than those to Europe and U.S. On October 15th, the freight rate (ocean freight plus surcharges) from Shanghai to base ports of the Australia and Singapore service issued by the SSE stood at USD 1,003/TEU, with a week-on-week decrease of 4.1%.

In Southeast Asia service, the cargo volume slightly decreased, yet the freight rate showed relatively steady, as it had already dropped before the National Day holiday. On October 15th, the freight index of the Southeast Asia service issued by the SSE reported 974.64 points, basically equal to last week.

The slot utilization for the voyages from Shanghai to Japan service descended to 65% this week, a sharp declined compared to last week, nevertheless, the freight rate remained firm. On October 15th, the freight index of the Japan service issued by the SSE reported 749.18 points, almost no change from last week.