Container Shipping Market (‘22/24W)

 Global shipping rates(SCFI) rose for the fourth week in a row. While routes to the Americas and the Mediterranean continued to decline, South America and the Middle East continued to rise. ccording to the shipping industry, the Shanghai Container Freight Index (SCFI), a global shipping rate index, recorded 4,233.31 as of the 10th, up 25.30 points from the previous week.

 The SCFI peaked above the 5,100 level for the first time in January, and has since declined for the 17th week in a row. Since then, the decline has decreased, and then rebounded on the 20th of last month for the first time in 18 weeks.

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1.     Weekly Market Briefings

In the 23 weeks (6.6-6.10) of '22, the SCFI Composite Index recorded '4,233p'. Middle East and South America routes to rise for 4 consecutive weeks.
- Resumption of urban production activities following the lifting of the lockdown in Shanghai. As Chinese Premier Li Keqiang emphasized rational growth of the economy in the second quarter through supply chain normalization. Therefore, the recovery of production is expected to proceed rapidly.
- However, due to the outbreak of Corona 19 in Shanghai on the 6.9th, some areas were controlled, raising concerns about the city's lockdown. No high-intensity containment measures are expected as in the past two months, but further monitoring is needed.

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

2-1. Europe :

• European routes fall for 2 weeks in a row.
  - European routes in 2022 are generally weak.
  - Inflation in the eurozone in May recorded an all-time high of 8.1%. The European Central Bank (ECB) is expected to raise interest rates in July (25bp) and September to stabilize inflation. Possibility of a big step in September according to medium-term inflation forecasts

2-2. USWC/USEC :

• The West Coast of the US fell for 4 weeks in a row, and the East Coast route fell for 3 weeks in a row.
  - Freight rates on North American routes have weakened. However, it is expected to increase again in the summer peak season.
  - The American Retail Association estimates that U.S. imports fell 0.9% in May compared to the same period last year. June is expected to increase by 7.5% compared to the same period last year.

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3.     Time Charter Rate

 The TimeCharter rate for each container line/period is the same for 14 consecutive weeks, and there is no movement. Considering that the charter rate has not moved in spite of the SCFI's four-week rise, I believe the peak is right. In addition, 1) signals of a global economic downturn (US CPI announcement), and 2) concerns over the reopening of Shanghai, China, the container freight rate may decline faster than expected.

 

Ref ) Container Shipping Market (‘22/23W) (tistory.com)

Container Shipping Market (‘22/23W)

 

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4.     Technical analysis

MACD : October 08, 2021, Trade signal (Short Position establishment) signal occurred. When the MACD baseline is above 0, it can be seen as an increase in freight rates when viewed as a mid- to long-term trend, while below 0 is a downward trend.

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RSI: As of June 10, 2022, the RSI was 36.98. As in the 23rd week analysis, technical analysis recommends a buy position in the short term. There is no clear trend reversal, but if you look at it in the short term, it can be seen as a pattern of a slight upward trend after establishing a support level.

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5.     Conclusion

 The fact that the city of Shanghai has recently shown signs of re-spreading is a variable. Shipping rates are also expected to be affected if China once again pulls out the Shanghai lockdown card.

From a macro perspective, I expect freight rates to decline due to High inflation -> consumer purchase reduction -> inventory increase -> slowing cargo volume.

Thanks.