SCFI jumps 10.5%

Since last week, rates from Shanghai to the U.S. West Coast have surged 37.6 percent, from $1,226 per FEU to $1,687 per FEU.    The Shanghai Shipping Exchange’s Shanghai Containerized Freight Index (SCFI) increased 10.5 percent from last Friday’s reading of 837.42 to a reading of 925.45.
   From Shanghai to the U.S. West Coast, rates soared 37.6 percent since last week, from $1,226 per FEU to $1,687 per FEU, while from Shanghai to the U.S. East Coast, rates shot up 20.2 percent, from $2,233 per FEU to $2,685 per FEU.
   Meanwhile, from Shanghai to Europe, rates rose 4.8 percent since last week, from $919 per TEU to $963 per TEU, while from Shanghai to the Mediterranean, rates inched up 3.6 percent, from $852 per TEU to $883 per TEU.
   Spot market rates from China to North Europe have more than doubled since May 2016, really taking off in the second half of 2016 and then stabilizing since the end of last year, Philip Damas, director of Drewry Supply Chain Advisors said during a webinar this week.
   Summing up east-west and global freight rates (both spot and contract), Damas pointed out how after several years of very deep rate decreases, the tide is turning for freight rates this year, and Drewry forecasts rates will rise 16 percent this year. Drewry expects to see further increases in 2018.
   Drewry also projects carriers will turn a profit this year, not only because of the rising freight rates, but also because it believes consolidation will provide the large carriers with synergy and economies of scale benefits, which will feed into the bottom line. However, Drewry believes this will be tempered by increasing bunker costs over the medium term and higher operating costs, which have been held back by weak profitability.