Container Shipping Market (‘22/17W)

 SCFI fell for 14 weeks in a row, the lowest in nine months. It is evaluated that shipping rates, which have risen sharply since the beginning of last year due to the global logistics crisis, have entered the stage of adjustment. According to the shipping industry on the 24th, the Shanghai Container Freight Index (SCFI), a representative global shipping rate index, stood at 4,195.98 as of the 22nd, down 32.67 points from the 18th (4,228.65) a week ago.

 SCFI calculates the freight index by counting the calculation start date (October 16, 2009) as 1000. After hitting an all-time high at 5,109.60 in early January this year, it has been declining for the 14th week in a row. It is the lowest level in nine months since the end of July last year (4,196.24).

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1.     Weekly Market Briefings

• In the 16th week of 2022 (4.18~4.22), the SCFI Composite Index recorded ‘4,196.0p’. Weakness continued on all routes except for South America and fell for 14 weeks in a row.
  - Due to the lack of truckers due to the prolonged lockdown in China, imported cargo cannot be taken out in a timely manner, and congestion at the Shanghai container terminal continues.
  - Chinese authorities are pushing for some easing of controls to alleviate logistics congestion and improve manufacturing production. Tesla's Shanghai plant resumed operation in three weeks in a closed-loop manner, but production fell far short of the pre-lockdown level.

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

 2-1. Europe :

• European routes down for 13 weeks in a row.
  - Weakness continued due to sluggish demand in China and uncertainty in the European economy. In the first quarter of this year, container throughput at the Belgian port of Antwerp, the second largest container port in Europe, decreased by 1.5% compared to the same period of the previous year due to continued stagnation and the impact of the Ukraine crisis.
  - Germany's 'LIDL', the world's fifth-largest retailer, established 'Tailwind Shipping' directly to respond to the logistics chaos and plans to put container ships on European routes around the middle of this year. The shipper's direct establishment/operation of the shipper is somewhat unusual compared to the case in which existing shippers only chartered ships.

 

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2-2. USWC/USEC :

• Same as the previous week on the West Coast of the US, while the East Coast route turns downward in two weeks.
  - US routes have compared to other routes that continue to be weak, they are relatively strong and move sideways. However, due to the lockdown in Shanghai, the volume has been declining recently. The North American local research institute (FreightWaves)'s container traffic volume index from China to the US has fallen by about 31% since 4/6.
  - As of April, a total of 702 ships and 5.75 million TEUs were deployed on the North American route, which is about 24% higher than the same period of the previous year.

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3.     Time Charter Rate

  Containership time-charter rates continued at very strong levels this week. Despite the current 14-week drop in container shipping rates, one of the reasons why the market cannot be confirmed is because of the still high time charter rate. In other words, it can be inferred that the fact that charter rates are still high in the long/short-term contracts for the five standard ships below is because the market is expected to remain strong in the future. It can be emphasized that the SCFI rate index is also firmly weakened when the charter rates are clearly falling.

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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

There is also a forecast that shipping rates will rise again once the COVID-19 situation subsides. It is observed that the sudden pouring of shipments from Shanghai may cause a bottleneck. In particular, the second quarter is a peak season when the traffic volume increases. Let's keep an eye on what the market situation will be like.

 

Thanks.