Container Shipping Market (‘22/27W)

 The container freight index (SCFI) is showing a downward trend. Last week's SCFI was 4,203, down 13p from 4,216 in the fourth week of June. The SCFI, which broke the 5,000 mark in March of this year, is showing a correction trend as freight rates for European routes have recently declined. Let's take a closer look at SCFI's fare index by route below.

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1.     Weekly Market Briefings

 

Recorded at ‘4,203p’ in the SCFI Composite Index for 26 weeks (6.27~7.1) in ‘22. SCFI fell for 3 weeks in a row due to continued weakness in routes to Europe and North America.
- European and North American routes continue to weaken due to inflation and interest rate hikes, and Middle East routes are temporarily suspended due to increased supply and reduced freight rates.
- Global realibility in May was 36.4%, which is still sluggish compared to the pre-pandemic level, but it improved slightly, rising by 2.1%p from the previous month.

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

2-1. Europe :

 

◦ European routes declined for 5 weeks in a row.
- Logistics congestion intensifies as port and rail worker strikes continue across Europe, including Germany, Belgium, and the UK. However, the impact of a contraction in demand due to inflation is greater, and freight rates continue to weaken.

2-2. USWC/USEC :

 

◦ The West Coast of the US fell for 7 weeks in a row, and the East Coast route also fell for 6 weeks in a row.
- The International Monetary Fund (IMF) lowers the US economic growth rate this year from 3.7% to 2.9% and the forecast for ‘23 from 2.3% to 1.7%.
- Existing labor-management agreement on the western port of the US expires on 7.1 days. The U.S. Labor Secretary announced that progress had been made in the negotiations between labor and management, but details were not disclosed.

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3.     Time Charter Rate

 

 The TimeCharter rate for each container line/period has been the same for 17 consecutive weeks, and there is no movement. Although there is no movement to the extent of boredom, the battle for strength between shipowners, charterers, and shippers is in full swing. Although spot freight rates have fallen, historically, they are still very high, and depending on their learning ability, it will not be easy for ship owners to lower the charter rate. This is because the moment the rate is lowered, a really bearish market is created.

 

Ref ) Container Shipping Market (‘22/26W) (tistory.com)

Container Shipping Market (‘22/26W)

 

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4.     Technical analysis

MACD : October 08, 2021, Trade signal (Short Position establishment) signal occurred.

RSI: As of July 1, 2022, it recorded RSI of 35.1, 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

 In the industry, as the SCFI has shown a long-term decline since its peak at the beginning of the year, some are concerned about a peak out. Although peak season is approaching in 2H, freight rates are unlikely to rebound amid global uncertainties

 

Thanks.