CCFI Commentary Issue 09, 2011

Weekly Report of China Export Container Transport Market
(CCFI Commentary in Issue 09, 2011)
This week, with the weak recovery in European and American services, the China containerized transport market generally remained slack and the capacity still saw surplus.


On February 25th, the China Containerized Freight Index issued by Shanghai Shipping Exchange reported 1056.06 points, basically equaling to last week; while the Shanghai Containerized Transport Index came out at 1036.51 points, down 2.3% from last week.
While the Europe service was still in its upturn period in the post-Chinese new year, the controversy between the sluggish demand and the continuous increasing capacity kept the market unbalanced. We could see a relatively potent booming force in the cargo volume of the Northern China where there was a 85% slot utilization and a USD 1200/TEU ~ USD 1250/USD freight rate; whereas a limited growth was witnessed in the Eastern China’s export as the freight rate slightly sagged. The Southern China, however, saw a flat demand, which mainly attributed to a temporary labor insufficiency, putting off the manufacturers’ productions and slash the exports. The slot utilization of the voyages out of the region only hovered 75% with an intensified dropping freight rate.
On February 25th, the freight indices of the Europe and Mediterranean services were 1441.24 points and 1447.66 points, respectively down 0.8% and 0.5% from last week.


In North America the dipping trajectory of cargo volume was curbed with the slot utilization at about 70%, and freight rate marginally decreased. On February 25th, the freight rate (ocean freight plus surcharges) from Shanghai to base ports in US west coast and US east coast were USD 1783/FEU and USD 3011/FEU, respectively descended by 2.8% and 1.5% from last week. What’s worth mentioning was the monthly growth of 1.5% reported from the US’ entire retail sales in the first 3 weeks of February, while the US Consumer Confidence Indicator showed bouncing as well, implying a sound economy development in US and a prosperous demand from China goods.


Although carriers in Australia and Singapore services tried to cut the capacity, but the low cargo volume let the scenario of the glut of ships hardly ameliorated. The slot utilization on most voyages averaged at 60% while the freight rate kept dipping. On February 25th, the freight rate (ocean freight plus surcharges) for the voyages from Shanghai to base ports in Singapore and Australia quoted USD 801/TEU, down 2.3% from last week. Pundits believe one of the factors keeping depressing the cargo volume on the service is the underlying conventional slack season, besides, the natural calamities recently inflicting over the Australia like floods and hurricanes also contributed. It was rumored that the Asia Australia Discussion Agreement (AADA) were poised to extend its capacity readjustment plan, which originally announced to implement from January to March, due to the gloomy expectation.
A sharp rally of the shipment in Japan service could be perceived this week, as the slot utilization soared above 60% and the freight rate remained steady. On February 25th, the freight index of the Japan service issued by SSE was 769.35 points.