23.12.06SCFI Increase in Week 48

The composite Shanghai Containerized Freight Index (SCFI) stood at 1,010.81 points in Week 48, rising 1.8% from the previous week, which was its first rise in four weeks.

On the U.S. and Europe trades, shipping lines continues to adjust capacity as they are holding negotiations for renewing yearly contracts. Freight rates, as such, picked up on the trades, but due to an imbalance between demand and supply, it is unclear if they will continue to increase.

In Week 48, spot rates for container exports from Shanghai were favorable across the board on east-west trade lanes. They inflated 9.2% to $851 per TEU to Europe, 6.7% to $1,261 per TEU to the Mediterranean, 3.6% to $2,466 per FEU to the U.S. East Coast and 1.2% to $1,646 per FEU to the U.S. West Coast.

On north-south routes, ex-Shanghai spot rates rose 0.4% to $1,542 per TEU to southern Africa. In contrast, they fell 3.8% to $1,152 per TEU to the Middle East Gulf, 0.8% to $920 per TEU to Australia and New Zealand and 2.1% to $2,198 per TEU to eastern and western Africa.

In the intra-Asia waters, container exports from Shanghai were moved at $200 per TEU to Southeast Asia, which grew 2%, but at $304 per TEU to Kansai, Japan; $319 per TEU to Kanto, Japan; and $137 per TEU to South Korea, all of which remained unchanged.

The Panama Canal, which normally allows 36 ships to pass it a day, will reduce the number of 22 in December and 20 in January. Transit fees are also expected to rise. As such, some shipping companies have announced surcharges of about $200 per TEU. Overland transport from the U.S. West Coast is expected to increase if marine transport via the Panama Canal is under restriction for a long time.

The schedule reliability of services to and from the U.S. East Coast remained low at 36.5% in October. On the other hand, congested situations at U.S. West Coast ports have been remedied since an agreement was reached between labor and management. Consequently, the schedule reliability of services to and from the West Coast rose to 53.4%, the highest reliability since August 2020. It is projected that West Coast ports will continue to perform well.

On the trade to and from the U.S., operators will cancel 24 sailings this month and 12 next month. They also intend to impose another general rate increase (GRI) within the year. Some carriers are working to extend ongoing contracts to—January and sign new contracts with increased freight rates.

On the Europe trade, freight rates are envisaged to stay weak in 2024, as the economies of major powers are also projected to remain dull. The Organisation for Economic Co-operation and Development (OECD) anticipates that economic growth will smaller in the region than other economic blocs. More specifically, real GDP is foreseen to rise below 1%—0.8% in France, 0.7% in the U.K. and 0.6% in Germany.