• ITVI.USA
    16,030.520
    117.340
    0.7%
  • OTLT.USA
    2.809
    0.016
    0.6%
  • OTRI.USA
    22.220
    -0.080
    -0.4%
  • OTVI.USA
    16,016.550
    115.560
    0.7%
  • TSTOPVRPM.ATLPHL
    2.950
    -0.570
    -16.2%
  • TSTOPVRPM.CHIATL
    3.610
    0.650
    22%
  • TSTOPVRPM.DALLAX
    1.370
    -0.240
    -14.9%
  • TSTOPVRPM.LAXDAL
    3.550
    0.210
    6.3%
  • TSTOPVRPM.PHLCHI
    2.320
    0.220
    10.5%
  • TSTOPVRPM.LAXSEA
    4.110
    0.250
    6.5%
  • WAIT.USA
    126.000
    0.000
    0%
  • ITVI.USA
    16,030.520
    117.340
    0.7%
  • OTLT.USA
    2.809
    0.016
    0.6%
  • OTRI.USA
    22.220
    -0.080
    -0.4%
  • OTVI.USA
    16,016.550
    115.560
    0.7%
  • TSTOPVRPM.ATLPHL
    2.950
    -0.570
    -16.2%
  • TSTOPVRPM.CHIATL
    3.610
    0.650
    22%
  • TSTOPVRPM.DALLAX
    1.370
    -0.240
    -14.9%
  • TSTOPVRPM.LAXDAL
    3.550
    0.210
    6.3%
  • TSTOPVRPM.PHLCHI
    2.320
    0.220
    10.5%
  • TSTOPVRPM.LAXSEA
    4.110
    0.250
    6.5%
  • WAIT.USA
    126.000
    0.000
    0%
American Shipper

SCFI slips as rates to Northwest Europe, Med drastically decline

The Shanghai Containerized Freight Index fell 1.1 percent from last Friday, driven down by lower rates on the Shanghai to Northwest Europe and Mediterranean trades, which was partially offset by higher rates from Shanghai to the United States.

   The Shanghai Shipping Exchange’s Shanghai Containerized Freight Index (SCFI) fell 1.1 percent since last Friday’s reading of 677.70 to a reading of 670.29.
   Rates on the Shanghai to Northwest Europe and Mediterranean trades, which combined, hold a 30 percent weight on the overall SCFI, drastically declined since last Friday. However, these rate declines were partially offset by increases on the Shanghai to the U.S. West Coast and U.S. East Coast routes, which hold a combined weight of 27.5 percent on the overall index.
   From Shanghai to Northwest Europe, rates dropped 16.7 percent, from $932 per TEU to $776 per TEU. On the Shanghai to Mediterranean trade, rates tumbled 20.3 percent, from $951 per TEU to $758 per TEU.
   From Shanghai to the U.S. West Coast, rates jumped 21.9 percent, from $1,166 per FEU to $1,421 per FEU, while on the Shanghai to U.S. East Coast trade, rates rose 8.3 percent, from $1,727 per FEU to $1,871 per FEU.
   Shipping research and consulting firm Drewry noted in its latest Container Insight Weekly how the American market has been very difficult to predict, and while demand for East Coast space has improved from mid-May onwards, it is still not clear if this year’s peak season is going to be strong or not.
   Carriers on the Asia-U.S. East Coast trade have introduced larger ships onto the loops, but have also removed services. In regards to the Asia to U.S. East Coast trade, Drewry said, “The overall net effect of all the service changes pushed the monthly supply of slots in June beyond the half a million teu threshold for the first time ever, comfortably surpassing the previous monthly record of 495,000 teus back in August of last year. The carriers, however, are aware that with spot rates at historic lows they can ill-afford to flood the market with excess capacity.”
   Meanwhile, trade from Asia to the East Coast of South America has seen a spike in prices due to carriers withdrawing capacity on the trade route, in line with lower demand, Drewry said. Representative spot market rates from Shanghai to Santos soared 420 percent from January to June.
   Although the huge rate increase seen on the trade will tempt carriers to replicate the plan of withdrawing capacity elsewhere to drive rates, they cannot simply copy and paste these tactics from one trade to another, Drewry said. “Each trade has its own special dynamics that make it easier or harder for lines to reach in ways that can positively influence pricing,” Drewry said.
   Carriers will have the most success on trades that are more closely coordinated, according to Drewry, which said the Asia to Middle East trade, for example, is far more uncoordinated than the Asia to East Coast of South America trade. The Asia to Middle East trade, “has many more competing lines and its dual structure of dedicated services alongside wayport loops make it virtually impossible to set the specific capacity needs of the trade as it is always subject to the developments happening in the bigger Asia-Europe market,” Drewry said.
   Overall, for the second quarter of 2016, freight rates moved in very different directions, Xeneta, an Oslo-based company that provides information on ocean freight rates, said this week during a webinar.
   Short term rates for 40-foot containers increased 25 percent on average from Far East Asia ports to North Europe main ports, while decreasing 19 percent from the Far East to ports in the southwestern U.S. Average long term rates declined on both of the same trade lanes – down an average of 13 percent to North Europe and down 32 percent to the southwestern U.S.

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