Container Shipping Market (‘22/16W)

 Global container freight rates, which hit all-time highs earlier this year, have fallen for the 13th week in a row. This is due to the decrease in the amount of exports from China due to the lockdown of Shanghai in accordance with China's zero-corona policy.

According to the shipping industry on the 16th, the Shanghai Container Freight Index (SCFI), a global shipping rate index, recorded 4228.65 as of the 15th, down 35.01 points from the previous week. After hitting an all-time high of 5109.60 in early January of this year, it fell for the 13th week in a row. The lowest level in 9 months since the end of August last year (4385.62)

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1.     Weekly Market Briefings

 In the 15th week of 2022(4.11~4.15) SCFI Composite Index ‘4,228.7p’ recorded. Weakness continued on all routes except North America and Japan, falling for the 13th week in a row

- In Shanghai, China, business of essential industries has resumed and lockdown measures have been partially eased, but inland transportation restrictions and trucker shortages in neighboring areas such as Ningbo/Hangzhou continue, making it difficult to transport import/export containers.

- China's consumer/producer price index rose 1.5%/8.3%, respectively, in March, raising concerns about inflation.

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

Europe :

• European routes declined for 12 weeks in a row.
  - The downward trend has continued since the beginning of the year, and there is a movement to extend the existing freight rates until the end of April. Intensifying competition between shipping companies to secure cargo will act as a downward pressure on freight rates in the region.
  - Eurozone's CPI rose 7.5% in March. By country, Germany rose 7.3% and the UK rose 7.0%, raising concerns about inflation. The European Central Bank announced a rate cut on 4/15, but the pressure to raise interest rates is expected to increase if the current high inflation continues

 USWC/USEC :

• Same as in the previous week on the West Coast of the US, but a slight increase in the East Coast route for 2 weeks in a row.
  - Freight rates are flat compared to other regions. Asia-North America export volume in March recorded 1.8 million TEU, growing for the 21st consecutive month. However, due to a series of unfavorable factors in recent years, shipments from China decreased by 2% compared to the same period of the previous year, while shipments from Korea and Vietnam increased by 4% and 11%, respectively.
  - The US CPI rose 8.5% year-on-year in March due to adverse factors such as the Russia war and the Chinese lockdown, which is the first time in 40 years since 1982. The biggest increase is expected in the future, when the Fed will try to raise rates further.

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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 66.4% higher than the 21 year and 377.2% higher than the 20 year. If the timr charter rate decline is visible, it will be easy to determine the overall downward trend of the SCFI.

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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.

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5.     Conclusion

 I believes the decline in SCFI is due to a decrease in exports to China due to the prolonged lockdown in Shanghai, China. However, I do not expect the freight rate to weaken for a long time. This is because, after the lockdown is lifted, the resumption of the Shanghai factory may cause a sudden influx of traffic, which could lead to a rise in shipping rates. In particular, there are concerns that the logistics turmoil that occurred in China after the lifting of the COVID-19 shutdown in the second half of 2020 could be repeated in the context of the second quarter being the peak season when the volume of goods increased.

 

Thanks.