Shanghai Containerized Freight Index slightly increases in six months

Sentiment in the international container shipping market turned positive for the first time since September 2022, when the Shanghai Containerized Freight Index (SCFI) recovered slightly for the week ending April 2, according to Linerlytica's latest report.

The recovery was supported by improved container freight rates on the route from East Asia to the Middle East and South America.

Linerlytica commented that there is growing confidence in the mid-April rate hike on some major routes.

"Carriers are making a last-ditch effort to raise spot rates on the Transpacific ahead of the 1 May contract season with rates expected to rise by US$500-600/FEU," Linerlytica said.

SCFI recovered slightly last week on improved rates in the Middle East and Latin America on stronger demand, but the rate hike in April should give carriers a much-needed rebound after Spot rates are down more than 80% since last year.

The determination of carriers to maintain rates will continue to be tested in the coming months as charter and resale prices continue to rise, with vessel availability rapidly declining and carriers showing renewed confidence to push ahead with new capacity additions as the summer peak season approaches. New vessel deliveries hit a five-year high of 200,267 TEU in March and are on track to surpass 2.2 million TEU in 2023.

Supporting the rate recovery is increased port congestion, Linerlytica noted that approximately 1.88 million TEUs, or 7.1% of the global fleet, are stranded at port berths worldwide, compared with 6.8% a week ago.

Particularly in the eastern Mediterranean region and some North American ports including Vancouver, Oakland and Houston, congestion increased in the past week. Some African ports, such as Cape Town and Damietta, are severely congested.

In its March report, Maritime Strategies International noted that US and European retailers still have too much stock, especially as rising interest rates have affected the real estate market in those regions, limiting import furniture and building materials.

MSI stated that although Europe's imports from East Asia fell by 10.8% in January, a decrease compared to the last 4 months of 2022, there is still more downside risk.

"Firstly, inflation is proving to be sticky, thereby not favouring an increase in consumer spending on discretionary goods which would lead to a meaningful decline in retail inventories. Secondly, the European Central Bank is expected to keep hiking interest rates, negatively impacting the already markedly weakened housing market," said MSI.

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Source: Phaata.com (According to ContainerNews)

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