24.07.03SCFI Increases in Week 26

The composite Shanghai Containerized Freight Index (SCFI) stood at 3,714.32 points in Week 26, which went up 6.9% due to favorable freight rate movements on the trade to Europe, a greater improvement than 2.0% in the previous week.

Looking at spot rates for container exports from Shanghai on the east-west routes, they surged 12.5% to $4,880 per TEU to Europe, 11% to $5,287 per TEU to the Mediterranean, 9.2% to $7,830 per FEU to the U.S. West Coast and 12% to $9,274 per FEU to the U.S. East Coast.

On the north-south trade lanes, ex-Shanghai spot rates declined 6.3% to $2,711 per TEU to the Middle East Gulf, 1.6% to $5,681 per TEU to East and West Africa and 0.6% to $1,397 per TEU to Australia and New Zealand. In contrast, they improved a minute 0.8% to $5,585 per TEU to Southern Africa.

In the intra-Asia waters, spot rates for ex-Shanghai container exports picked up 0.5% to $743 per TEU to Southeast and 1.8% to $172 per TEU to South Korea and remained unchanged at $293 per TEU to Kansai, Japan and $299 per TEU to Kanto, Japan.

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

Cargo owners are making shipment earlier as freight rates have been hovering at high levels for a long time now, accelerating port congestion and space supply shortages. Port administration could be adversely impacted in Europe and North America.

In France, President Emmanuel Macron has resolved the lower house of his nation’s parliament. It is now projected that port strikes will not be staged until September. In Canada, meanwhile, a judgement will be made soon on the legitimacy of rail workers’ strikes. There has been concern over port administration disruptions.

In China, the average container price has hit a two-year high. Forty-foot high-cube containers are now priced at $3,600 per unit, more than doubling from $1,700 per unit in March-April.

In North America, shipping lines are repositioning empty containers, while terminals are back in service. These factors have eased congestion at Asian ports. Cargo owners are, nevertheless, making shipment earlier as they are concerned about prolonged lead time resulting from congestion. As such, cargo demand is steady now in North America. Some shipping companies and freight forwarders have offered premium freight rates to allow cargo owners to make shipment earlier, accelerating spot rate rises. Airfreight movement continues to be brisk, underpinning high demand, although the U.S. Customs and Border Protection (CBP) has enhanced inspections on incoming e-commerce products.

Carriers intend to maintain high freight rates in August and September at a time when the trades to and from Europe and the Mediterranean continue to witness robust container movement and congested ports. For example, Mediterranean Shipping Co. (MSC) has raised the freight-all-kinds (FAK) rates for all shipments from Asia to Europe by as much as $9,800 per FEU for the bookings it receive from July 1 to July 4.

In Asia, the Maritime and Port Authority of Singapore (MPA) plans to increase container handling efficiency by adding three new berths a Tuas Port to eliminate congestion and rise container throughput.