CCFI Commentary Issue 05, 2011

Weekly Report of China Export Container Transport Market
(CCFI Commentary in Issue 05, 2011)

This week, the demand of the China containerized transport market was warmed by the shipment rush ahead of the Conventional Spring Festival, where the cargo volume boosted evidently on services like Europe and North America, nevertheless, the increase of which seemed not strong enough due to the excessive capacity. On January 21st, the China Containerized Freight Index issued by Shanghai Shipping Exchange reported 1060.64 points; while the Shanghai Containerized Freight Index came out at 1107.85 points, both declined 0.4% from last week.

Stepping into the peak period of the cargo exporting before the Spring Festival, the Europe service was seen its shipment volume keeping thriving and the slot utilization jumped to 95%, besides, fright rate remained steady. On January 21st, the freight index of the Europe service issued by SSE was 1482.37 points, basically no change with last week. In spite of the current prosperous market, cargo volume will definitely turn dull once entering the festival, until then there will be capacity cutting policies like voyages readjustment and cancellation on most services. As a result, how cargo volume recovers afterwards turn out to be the key of the short-term market. Freight rate will incur significant downward pressure if the cargo volume behaves with a disappointing growth by the moment.

In North America service, the market showed no signs of improvement because of the swelling capacity, although the cargo volume rose steadily. Slot utilization stayed around 90%. Statistics from CI ONLINE indicated a 1.723m TEU of capacity was engaging from Far-east to US west coast as of January 1st, multiplying by 48000TEU from December 2010. Bearish sentiments of the short-term market left carriers cutting the price for solicitation, where the restoration of the freight rate has been offsetting mostly by its downward trajectory since early January.

n January 21st, the freight rate (ocean freight plus surcharges) for the voyages from Shanghai to base ports in US west coast and US east coast services were USD 1955/FEU and USD 3168/FEU, respectively down 1.1% and 0.9% from last week.

Still, thanks to the pre-Spring Festival, both the transport demand and the cargo volume in Australia and Singapore service showed upward momentum. Also, the recent appreciating exchange rate of the Australian dollar against RMB greatly enhanced the purchasing power of the consignees in acceptance places, propelling the increase of the cargo volume. Besides, the sharp contract of the capacity on the service since late January pulled the slot utilization up to above 95% this week, where laden vessels and steady freight rate could be witnessed as consequence.

In Japan service, cargo volume marginally ascended and the slot utilization hovered around 70%, and freight rate maintained steady as usual. On January 21st, the freight index of the Japan service reported 753.40 points, generally remained the same from last week.

Latest report from Alphaliner informs that the growth of this year’s containerized transport market will back to normal, which the cargo volume is estimated to perk up by 7.7% annually. However the global capacity will be expected to inflate as well, by 1.3m TEU, or 8.6% from 2010, darkening the market of 2011.