Tuesday, June 23, 2015

China Containerized Freight Index......ANOTHER PESKY FACT!

China Containerized Freight Index

The China Containerized Freight Index (CCFI), which covers spot market rates and contractual rates from Chinese ports to major destinations around the world, dropped another 1.2% last week, to a multi-year low of 851.4. The China-Europe component dropped 2.5%. The CCFI is now 21% below where it was in February, and 15% below where it was in 1998.

The Shanghai Containerized Freight Index (SCFI) paints an even drearier scenario. Unlike the CCFI, it is composed only of spot rates, not contractual rates, from Shanghai to the rest of the world. And this baby plunged 6.8% last week to 581.25, an all-time low, 42% below where it was during the Financial Crisis, on October 16, 2009, when it was set at 1,000, and down 47% from February.

The Shanghai-Rotterdam sub-index plunged 14.4% last week to an all-time low of $243 per twenty-foot equivalent unit (TEU). Rates began to collapse in February. By April, when they'd crashed to around $400 per TEU, Drewry Maritime Researchestimated that the break-even rate for most carriers was $800 per TEU on that route. But now, the rates, at $243 per TEU, don't even cover the cost of fuel of about $300 per TEU.

This is what two unnamed container shipping executives, one from an Asian carrier, the other from a European carrier, told the Wall Street Journal about the containerized-freight fiasco on the China-Europe route:

"We are now shipping at an absolute loss. With the bunker-adjustment-factor surcharge at $300 for Asia-Europe, we are losing more than $50 per box."

"Unless by a miracle demand grows, we are up for heavy losses in the next quarter and maybe the rest of 2015."

The rate for shipping a container on that route, after plunging for months, is now below even the cost of fuel.

This is what the four-month plunge looks like:

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