24.05.29SCFI Increase 52% in 4 Weeks

The Shanghai Containerized Freight Index (SCFI) increased 7.2% from the previous week to 2,703.43 points in Week 21, which was a year-on-year rise for the fifth week in a row. Spot rates for container exports from Shanghai hiked on almost all of the trade lanes from the port due to escalations in capacity and container shortages as shipping services are being rerouted to the Cape of Good Hope to avoid the Red Sea crisis. The composite index, which was even higher by 20.7% than the pre-crisis high of 2,239.61 points, surged as much as 52% over the four weeks from April 26.

Spot rates for container exports from Shanghai were favorable on the east-west routes, going up 11.8% to $3,409 per TEU to Europe, 7.4% to $4,248 per TEU to the Mediterranean, 13.3% to $5,189 per FEU to the U.S. West Coast and 7.6% to $6,482 per FEU to the U.S. East Coast.

On the north-south trade channels, ex-Shanghai spot rates grew 7.7% to $2,391 per TEU to the Middle East Gulf, 2.4% to $1,289 per TEU to Australia and New Zealand, 5.7% to $7,065 per TEU to South America, 15.5% to $3,888 per TEU to Southern Africa and 16.2% $5,352 per TEU to East and West Africa.

In the intra-Asia waters, spot rates for containers from Shanghai jumped 10.8% to $450 per TEU to Southeast Asia but stayed flat at $292 per TEU to Kansai, Japan, $305 per TEU to Kanto, Japan and $161 per TEU to South Korea.

The SCFI rose more than 50% just in four weeks for the second time since it was first unveiled, as it soared as much during the coronavirus pandemic. There is growing concern over a negative cycle in which capacity and container shortages get increasingly worsen.

Shipping lines are being forced to make detours around the Cape of Good Hope, prolonging transit times and delaying empty container repositioning to Asia, to China, in particular. As such, China International Marine Containers (CIMC), the world’s leading container maker, sold 494,000 20-foot containers in January-March, which swelled some sixfold from a year earlier.

Spot rates are on the rise on the U.S. trade. To maximize profitability, therefore, operators are reducing capacity allotments for non-vessel-operating common carriers (NVOCCs) and freight forwarders. As a result, reduced capacity is causing further increases in spot rates. Container movement from Asia to the U.S. ballooned 19.1% year on year to 5.6 million TEUs in January-April, according to data from the Port Import/Export Reporting Service (PIERS). Retailers project that U.S. imports will continue to rise until the traditional shopping season in autumn.

On the Europe route, it is not anticipated that demand will grow weaker immediately or that capacity shortages will be eased. CMA CGM has announced that it will raise its freight-all-kinds (FAK) rate for containers from Asia to North Europe to $6,000 per TEU on June 1. The average number of days for which export containers are in port in Shanghai reached 41 days, hitting the longest record in three years. As shown in this example, port congestion has been observed owing to higher demand.

The SCFI represents spot rates for container exports from Shanghai that do not include terminal handling charges (THCs), which was set at a baseline 1,000 points on Oct. 16, 2009.