Spot container rates continue falling on major trades

The Shanghai Containerized Freight Index and the Ningbo Containerized Freight Index, which measure spot pricing on various east-west trade lanes, both dropped again since last week.    Spot container rates as measured by the Shanghai Shipping Exchange’s Shanghai Containerized Freight Index (SCFI) fell 7.3 percent from last week’s reading of 467.54 to a reading of 433.46.
   The SCFI, which is developed by panelists from liner companies and shipping lines, includes spot rate estimates from Shanghai to 15 different regions around the world.
   Since last week, rates from Shanghai to Northwest Europe fell 10.1 percent, from $257 per TEU to $231 per TEU; while rates from Shanghai to the Mediterranean dropped 11.3 percent, from $266 per TEU to $236 per TEU.
   Rates from Shanghai to Northwest Europe and the Mediterranean have continuously declined since Dec. 31, and since both of these trades combined hold a 30 percent weight on the overall SCFI, their declines have heavily contributed to the continuous fall in the overall index reading since then.
   Rates from Shanghai to the U.S. West Coast fell 12 percent since last week, from $1,005 per forty-foot container (FEU) to $884 per FEU. In addition, rates from Shanghai to the U.S. East Coast fell 9 percent, from $1,983 per FEU last week to $1,804 per FEU.
   In January 2016, the SCFI average was $671.50, while the FFA rate was $550, Richard Ward, a container derivatives broker at Freight Investor Services said. In February 2016, the SCFI average was $340, while the forward freight agreement (FFA) rate was $550.
   “By using risk management tools such as FFAs, carriers could have secured a proportion of their income at the aforementioned level and therefore protected themselves from these latest declines,” Ward said. “By not managing their revenue and therefore risk, they are now facing the consequences of lower rates and reduced income.”
   Meanwhile, the Ningbo Containerized Freight Index (NCFI), a composite of prices for 20-foot, 40-foot and high cube containers, also fell significantly since last week.
   The NCFI includes estimates from Ningbo to the East Mediterranean (Piraeus and Istanbul), the West Mediterranean (Barcelona, Valencia and Genoa), Europe (Hamburg and Rotterdam) and the Middle East (Dammam and Dubai), according to the Baltic Exchange, which publishes the NCFI on its website.
   From Ningbo to Europe, the index fell 14.2 percent since last week, from 195.66 to 167.94. In addition, from Ningbo to the West Mediterranean, the index tumbled 21.9 percent since last week, from 246.30 to 192.26; while from Ningbo to the East Mediterranean, the index dropped 21.1 percent, from 205.16 to 161.83. From Ningbo to the Middle East, the index fell 5.9 percent since last week, from 211.33 to 198.96.