Container Shipping Market (‘22/43W)

 SCFI fell for the 19th week in a row. As the downward trend continued for a long time, the freight rate index plummeted to the 1600 range.

 As highlighted in the very last article below, SCFI rates plummeted with the plunge in the Time Charter Rate. A decline in the charter rate, which I had emphasized over and over, was predicted, and the charter rate, which had set a direction, continued to decline regardless of the slight drop in freight rates.

Ref) Container Shipping Market (‘22/30W) (tistory.com)

Container Shipping Market (‘22/30W)

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1.     Time Charter Rate

 

If you compare it with the charter rate at the time of the 30 week analysis, you can see how big the difference is.

All of the lines have fallen by about 50% from their recent highs.

However, as shown in the table above,

1) Long-term decline is relatively small. 2) Large ships of 8,500TEU and over have a smaller drop than medium-sized ships of 6,800TEU.

In other words, along with the drop in SCFI's spot rate, it is natural that the drop in the short term is steeper than in the long term. The Asia-Americas route, where ships of 9,000 TEU or more are used, is relatively robust compared to other routes despite a decline in US imports.

 

However, a downward trend in charter rate for mid-sized vessels such as 6,800 TEU will encourage a smaller downward trend, which is expected to have an effect on the weakening of freight rates in Intra Asia(Cascading).

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2.     Comparison of SCFI Fares and Time Charter Rates

Looking at the figure above, the dark blue SCFI (Right) has declined for 19 consecutive weeks since June 10 (4,233). Just looking at the graph, it can be seen that SCFI preceded and Time Charter Rate followed.

In particular, it was confirmed that, despite the decline in SCFI, the 9,000TEU vessel continued its strength for 13 weeks until September 9 ($166,000/Day).

 

SCFI Vs. 6,800 TEU is seen as an over-downtrend, and 8,500 and 9,000 TEU levels are seen as under-descent. Although concerns about a decline in small and medium-sized vessels remain due to the 1) cascading effect, an 2) additional 10% drop in the 8,500TEU class is unavoidable.

 

Thank you