Container Shipping Market (‘22/28W)

 As of the 8th, the Shanghai Container Freight Index (SCFI), a global shipping rate indicator, recorded 4,143.87, down 59.4 points from the previous week. The freight index fell on 6 of the 7 routes, excluding the South American route. Freights on the West Coast route in the US fell by US$218 to US$7,116 per FEU (12m length container), showing the largest drop. European routes dropped by $34 to $5,697 from the previous week, and Mediterranean routes to $6,355, down $63 from the previous week.

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1.     Weekly Market Briefings

 In '22, for 27 weeks (7.4~7.8), the SCFI Composite Index recorded '4,144p'. SCFI fell for 4 weeks in a row due to continued weakness in routes to Europe and North America

- Consumption in Europe and the US contracted due to inflation, and freight rates continued to decline for key routes. South American routes are the only routes that are continuing their upward trend, but the upward trend is expected to slow due to the input of additional vessels.
- As Corona 19 re-spreads in some areas such as Shanghai, Xi'an, and Beijing, concerns about inland supply chain disruption such as truck movement increase, and monitoring is necessaryIndex Trend

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

 2-1. Europe :

 

◦ European routes drop for 6 weeks in a row.
- A sharp rise in prices in Europe reduces consumer purchasing power and shrinks demand. Eurozone's consumer price index (CPI) rose 8.6% year-over-year in June, hitting an all-time high.
- Demand is expected to continue to contract for the time being as interest rate hikes by the European Central Bank (ECB) are also expected in July and September.

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2-2. USWC/USEC :

 

◦ The West Coast of the US fell for 8 weeks in a row, and the East Coast route fell for 7 weeks in a row.
- Demand contracted due to inflation and increased inventory, leading to a decline in freight rates.
- Due to an increase in US inventories, the new orders index recorded 49.2, which decreased from the previous month, entering a contraction phase for the first time since May 2020.
- The US ISM manufacturing PMI fell from 56.1 in May to 53.0 in June. It recorded the lowest level since August '20, and concerns about a recession in the US are growing.

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3.     Time Charter Rate

 After a whopping 18 weeks after breaking the long silence, there was a change in the Timecharter rate. 6,800TEU In 3years (timecharter rate), although it is small, it has decreased by -1.26% compared to the previous week. As shown in the table below, there was no change in the remaining four lines, but when the downtrend of the market starts to become more real, the charter rate is expected to decline in earnest in other lines as well. Since it is still at a historically very high level, it is not recommended to make hasty judgments, but the containership market is expected to weaken gradually.

 

Ref ) Container Shipping Market (‘22/27W) (tistory.com)

Container Shipping Market (‘22/27W)

 

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4.     Technical analysis

MACD : October 08, 2021, Trade signal (Short Position establishment) signal occurred. The width of the histogram is gradually decreasing, but considering the current downward trend, the downward position is likely to continue.

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RSI: As of July 8, 2022, it recorded RSI of 31.4, a decline from the previous week. Given the weak basis for a buy/sell position, we recommend a wait-and-see situation for now.

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5.     Conclusion

 The decline in the SCFI is attributed to a decrease in sea freight volume due to a rise in the US benchmark interest rate, a delay in the recovery of the Chinese construction industry, and weak raw material prices. However, some are diagnosing that freight rates, which have risen abnormally since COVID-19, are returning to normal levels.

 However, concerns are growing that the recent global economic downturn is being reflected in shipping rates. The shipping industry is a representative industry leading the economy. In May, U.S. retail inventories were $705.3 billion (about 916 trillion won), up 17.3% from the same period a year ago, and inventory is piling up worldwide.

These macroeconomic aspects need to be looked at carefully.

 

 

Thanks.