Container Shipping Market (‘22/19W)

 Global container shipping fares have fallen for 16 consecutive weeks. However, some routes are moving upward, raising speculation that the decline in fares may be ending. According to the shipping industry on the 7th, the Shanghai Container Freight Index (SCFI), a global shipping fare indicator, fell 13.56 points from the previous week to 4,163.74 as of the 6th.
It hit an all-time high of 5,109.60 in early January this year and fell for 16 consecutive weeks. 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 18th week of 2022 (5.2-5.6), SCFI Composite Index 4.1637p. Freights continued to weaken due to the aftermath of the Chinese blockade and sluggish demand, falling for 16 consecutive weeks
  - China’s Chaixin manufacturing PMI hit a 26-month low of 46 in April, marking a drop of about 15%shipments across Chinese ports in April, but Ningbo Port saw its throughput increase 10 year-on-year in April in return for the Shanghai blockade, surpassing 3 million TEUs for the first time on a monthly basis
  - The U.S. government’s announcement of a 0.5% rate hike on May 5 is expected to have a negative impact on global trade volume if major countries increase the possibility of further rate hikes and tighten their finances due to economic uncertainties

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

 

2-1. Europe :

 

• European route declines for 15 consecutive weeks
  -In April, the overall supply of European routes rose 10% year-on-year to 5.45 million TEUs on 348 ships, following the Evergreen CMA’s active expansion of fleets. However, due to the recent contraction in demand due to global economic uncertainties, freights continue to weaken
  -Due to the prolonged Russia war, the increase in oil prices and the lack of trackers in Eastern Europe have caused the efficiency of inland transportation to decrease, while the increase in long-term stay in the box has caused more than three days of waiting at the port of Antwerp in Rotterdam, continuing congestion at major European ports

 

2-2. USWC/USEC :

 

• Routes fell for three consecutive weeks during the same period
  - Due to the sluggish volume caused by the blockade of Shanghai, the shipping situation has improved slightly, and the congestion continues due to the weak freight rate and the decrease in inland iron transport and tracking efficiency in North America, and the congestion continues on LA/LB (25days) and Charleston (12days).
  - With the arrival of the seasonal peak season, there is a prospect of a rebound after June, but uncertainties are expected to increase due to recent economic conditions and issues such as labor-management consultations at western ports
  - March inflation in the US and major OECD countries hit a 33-year high of 8.8%, prompting the US Fed (which announced a 0.5 p rate hike at the FOMC meeting in May, and hinted at a possible further 0.5 p increase each in June as well)

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 3.     Time Charter Rate

 

Containership time-charter rates have mostly maintained their current high level without fluctuations for 10 consecutive weeks. In particular, considering the fact that the price of the latest rate on 5/6 and the average rate in April is the same, there is a tendency to maintain a high freight rate trend without change. Therefore, we maintain our buy position on HMM (CODE: 011200) in Korea. If the US economy slows down or if the supply of ships without dimoliton occurs in 23/24, the position will have to be liquidated before.

Ref) Container Shipping Market (‘22/18W) (tistory.com)

Container Shipping Market (‘22/18W)

 

 

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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

 The industry has not come up with a clear answer to the prolonged decline in shipping freights. The argument that a drop in Chinese exports due to a prolonged blockade of Shanghai, China, is the main factor behind the drop in SCFI. However, it is not expected that the freight will weaken for a long time. This is because after the lifting of the blockade, shipments could suddenly pour out due to the resumption of the Shanghai plant, which could lead to a rise in shipping freight. In particular, there are concerns that the logistics crisis in China could be reproduced after the lifting of the COVID-19 shutdown in the second half of 2020, given that the second quarter is a peak season for increased volume of goods.

 

Thanks.