CCFI Commentary Issue 50, 2010

Weekly Report of China Export Container Transport Market
(CCFI Commentary in Issue 50, 2010)

This week, China’s containerized transport market witnessed a modest upswing, where a conventional export rush before the Spring Festival was seen in most services, pulling up the cargo volume substantially. On December 17th, the China Containerized Freight Index issued by Shanghai Shipping Exchange reported 1058.11 points; while the Shanghai Containerized Freight Index nailed at 1086.38 points, both of which down 1.4% from last week.

In Europe service, cargo volume obviously ascended with the slot utilization for most voyages climbing to 95% and laden for some. The figure for the Mediterranean service showed no less than 90%. Downward trajectory this week was alleviated as the market improved. On December 17th, the freight rate (ocean freight plus surcharges) for the voyages from Shanghai to base ports in Europe and Mediterranean fixed at USD 1333/TEU and USD 1236/TEU, respectively down 0.3% and 0.9% from last week. The drop narrowed by 1.2% and 1.1% respectively compared with the last week. Pundits believe the boom in December was mainly triggered by the manufacturers’ export impulse for fulfilling their annual plans, combined with the constant appreciation of the Euros. The demand for capacity will keep mounting while the conventional peak season before the Spring Festival is approaching, which will lead to a market equilibrium and subsequently the rally of the freight rate. Several carriers are understood to up shift the freight rate on January 1st , 2011 by about USD 300/TEU, yet still whether the rate rise would be fully achieved remains to be seen.

Quite similar with the Europe service, cargo volume rebounded for the North America service this week as the coming shipment rush before the end of the year. Carriers were keen on adding capacity, with the statistics showing that the number of the voyages from Shanghai to North America reported 183 in December, up by 9 from November. As a result, the expanding capacity offset the profit brought by the thriving shipment. On December 17th, the freight indices of the US west coast and US east coast issued by Shanghai Shipping Exchange were 1002.21 points and 1199.71 points, respectively down 2.0% and 0.5%.

In South America EAST COAST service, cargo volume revealed sluggish this week, causing slot utilization on most of the voyages at a lower level, and freight rate slumped. On December 17th, the freight rate (ocean freight plus surcharges) for the voyages from Shanghai to base ports in South America showed USD 1521/TEU, slipped 4.0% from last week.

In Australia and Singapore service this week the cargo volume went up slightly, yet the slot utilization only averaged at 70%, pressing the freight rate going down. On December 17th, the freight rate (ocean freight plus surcharges) for the voyages from Shanghai to base ports in Australia and Singapore quoted USD 918/TEU, down 5.1% from last week. Cargoes loaded on the vessels next week will be scheduled to arrive at the acceptance places when Christmas holiday ends in most ports, which will encourage the exports. Considering the rally of the capacity demand, carriers were poised to restore the freight rate on January 15th , 2011 with its range depending on market circumstances.