Container Shipping Market (‘22/15W)

 As of April 08, SCFI(Shanghai Containerized Freight Index) recorded 4,263.66. The average price for the last five years('15-‘19) of SCFI is 801.84, and the 22 year-to-date value of 4,767.02 is 494.5% higher than the average price for the five years. Subdued activity in the containership charter market with the gap between owners’ and charterers’ ideas making it difficult for deals to be concluded. The charter rate level is currently very high, but it is necessary to check the trend with the SCFI in the future.

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1.     Weekly Market Briefings

 

• In the 14th week of 2022 (4.4~4.8), weakness continued on all routes except for the US East Coast and continued to decline for the 12th week in a row.
  
  - Shanghai lockdown scheduled until 4/5 is further extended. The manufacturing utilization rate, inland transportation and terminal productivity decline are negatively affecting local export logistics. As a result, major shipping companies announced plans to temporarily suspend about 50 sailings to Shanghai Port.
  - As of the end of March, the non-operating capacity exceeded 700,000 TEU for the first time since the end of 2020 along with the recent decline in freight rates.

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2.     Index Trend(Composite / Europe / USWC, USEC)

2-1. Europe :

 

• European routes declined for 11 consecutive weeks.
  
  - The Ukrainian issue and the Shanghai lockdown negatively affected demand and continued weakness. In major European ports, the long-term stay of containerships bound for Russia is increasing, and the shortage of inland truckers.
  - Crude (Brent), which has been strong in the aftermath of the war, reached $140 per barrel, the highest since '14. Eurozone growth could fall by up to 3% this year if current energy prices continue

2-2. USWC/USEC :

 

•  US West Coast declines for 5 consecutive weeks, but rebounds for the first time in 8 weeks on East Coast routes.
  
  - 2M Alliance decides to temporarily suspend all 8 North American routes (Blank Sailings) and is responding to the sluggish demand caused by the Shanghai lockdown.
  - North American port congestion has improved compared to the beginning of the year, but West coast LA/LB Port had about 30 days and Charleston Port had about 12 days waiting for berthing.

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3.      Time Charter Rate

 

 Containership timecharter rates continued at very strong levels this week.

When looking at the standard of 9,000TEU (6-12M), the 22-year average rate is 66.1% higher than the 21 year and 376.4% higher than the 20 year. The rate has not yet decreased compared to the previous month (March average), but looking at the decline in the SCFI index, the charte rate is also expected to turn downward.

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4.     Technical analysis

MACD : October 08, 2021, Trade signal (Short Position establishment) signal occurred. So far, a strategy to maintain a short position seems necessary.

 Currently, the Chinese government is implementing a “zero-coronavirus” policy to completely block these areas as the number of confirmed COVID-19 cases in China increases. After the Russia-Ukraine War, shipping companies stopped calling in Russia and diverted their vessels to other places, and the supply of ships also increased. In addition, demand contracted as the US and European governments, fearing inflation, tightened money lines by raising interest rates at once. It is interesting to see where the shipping rate index will go.

 

Thanks.