Container Shipping Market (‘22/26W)

 The global container freight rate index(SCFI), which saw its rise in five weeks last week, declined for the second week in a row. SCFI recorded 4216.13, down 5.83 points from the 17th. The overall index decline was not large, but the rise and fall of some routes were sharply divided.

 Freights on the East Coast and West Coast routes to the Americas fell by $269 and $111 per 1TEU (6m length container) to $9804 and $7378, respectively. It is the first time since July of last year that it fell below the $10,000 level for the Americas.

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1.     Weekly Market Briefings

• In the 25th week of 2022, the SCFI Composite Index recorded ‘4,216p’. Despite continued rise in Middle East and South American routes, SCFI decreased slightly due to weak period routes.
  - The trade volume in mid-June is recovering gradually compared to the beginning of the month, but the sluggish demand due to inflation in the US and Europe is playing a bigger role than the concentration of unprocessed volumes after the lifting of the lockdown in Shanghai.
  - In addition, the fact that global companies preemptively implemented orders and inventory build-up in the first quarter of last year in preparation for inflation in preparation for the high season also acted as a factor in the current volume contraction. The trend of canceling or delaying new orders due to an increase in inventory due to a recent decrease in consumer demand.

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

2-1. Europe :

 

• European routes fall for 4 weeks in a row.
  - Inflation in Europe is intensifying and freight rates are weakening. In particular, the UK consumer price index rose 9.1% in May compared to the same period last year, recording the highest level in 40 years for the second month in a row following April.
  - Meanwhile, due to a shortage of German port workers and truckers, the residence time of imported containers in Northern Europe has increased and empty containers are being delayed.

2-2. USWC/USEC :

• West Coast of the US fell for 6 weeks in a row, and East Coast routes fell for 5 weeks in a row.
  - Weakness in the freight market as consumer demand is contracted due to inflation and massive interest rate hikes. In particular, the East Coast route fell below U$10,000/FEU for the first time since July '21.
  - Container throughput at western ports in North America in May decreased compared to the same period last year. Port of Los Angeles handled 970,000 TEU containers, a decrease of 4.3% compared to the same period last year, and Long Beach Port also recorded a container throughput of 890,000 TEUs, down 1.8% from 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 16 consecutive weeks, and there is no movement. As mentioned in the previous analysis, the decline in Charter Rate will be used as a strong reason to support a clear decline in SCFI rates, so we need to keep an eye on the movement.

 

Ref ) Container Shipping Market (‘22/25W) (tistory.com)

Container Shipping Market (‘22/25W)

 

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4.     Technical analysis

MACD : October 08, 2021, Trade signal (Short Position establishment) signal occurred. The 60-day moving average almost came close to the MACD ‘0’ level, but looking at the downtrend of the SCFI, there will be no major reversal.

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. As of June 24, 2022, it recorded RSI of 35.94, a decline from the previous week. As a result of reflecting the latest freight rate trends, we recommend a short position even in the short term.

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5.     Conclusion

 SCMP reported that container freight rates from China to the US are on the decline due to slowing consumption due to the worst inflation in 40 years in the US. In particular, the SCMP had predicted that container transport demand would increase as Shanghai was lifted from the two-month lockdown.

 

Thanks.