Weekly Report of China Export Container Transport Market

(CCFI Commentary in Issue 43, 2010)

This week, the China's export containerized transport market carried on the previous downward momentum, as cargo volume and freight rate kept shrinking on main services. On October 29th, the China (Export) Containerized Freight Index issued by Shanghai Shipping Exchange reported 1133.96 points, basically no change with last week; while the Shanghai (Export) Containerized Freight Index reported 1259.11 points, down 1.4% from last week.

The demand in Europe service didn't show any signs of recovery this week, and the capacity available on the market was still seen overabundance. Besides, freight rate appeared to slip slightly, which quoted USD 1500/TEU ~ USD 1550/TEU on the Europe service; while the figure on Mediterranean service hovered around USD 1500/TEU. Yet still, carriers didn't seem to lower the price despite the excessive capacity, while some of them were poised to cut the capacity in order to regain the market equilibrium. On October 29th, the freight indices of Europe and Mediterranean services issued by Shanghai Shipping Exchange showed 1622.88 points and 1687.22 points, respectively down 0.4% and 0.9%.

It seems North America was also impacted by the similar predicament in Europe and Mediterranean, as the capacity remains surplus. The freight rate was seen weak, which dropped by USD 100/FEU ~ USD 300/FEU from last week. In addition, the fourth quarter has always been a slack season for the box shipping industry, so the freight rate was expected to keep the slump trend. On October 29th, the freight rates (ocean freight plus surcharges) for the voyages from Shanghai to the base ports in US west coast and US east coast quoted USD 2202/FEU and USD 3557/FEU, respectively down 4.4% and 4.0% from last week.

In Australia and Singapore service, owing to the Christmas shipment, the cargo volume remained high and some of the voyages were witnessed no slot available. Besides, freight rate continued climbing up as the figure is nailing around USD 1000/TEU. But the rate will probably go down in late November when the cargo volume starts decreasing attributing to the finish of the Christmas shipments. On October 29th, the freight rate (ocean freight plus surcharges) for the voyages from Shanghai to the base ports in Australia and Singapore services reported USD 1052/TEU, ascended 6.2% from last week.

In Southeast Asia service the cargo volume marginally declined, but freight rate in some of the routes on the service plummeted crucially, as the voyages from Shanghai to Singapore the rate (without surcharges) had broken the expectation and nose dived to USD 100/TEU. On October 29th, the freight index of the Southeast Asia service issued by Shanghai Shipping Exchange was 937.75 points, slipping 6.5% from last week.

In Japan service, the cargo volume exported from Shanghai to Japan service aggregated 240 thousand TEU, where the slot utilization reported 84%, slightly decreased from last week. Besides, the freight rate maintained firm. On October 29th, the freight rates (ocean freight plus surcharges) for the voyages from Shanghai to base ports in Kanto and Kansai quoted USD 308/TEU, generally equaling to last week.

It is understood that the turn volume of the Guangzhou Chinese export commodities fair that pulled the curtain on October 27th totaled 8.62 million USD, just rose by 1.9% from last year's, which the growth down 0.2% from last year. In fact, the turn volume didn't increase so much as the figure indicates if the cost inflation and the appreciation of RMB had been taken into consideration. Obviously, the fair didn't rally to the level before the financial crisis and the prospects of the China's containerized shipping market remain unclear.