Off-Season Strength in Ocean Freight Rates Continues... Container Ship Index Soars to 3 Times Year-on-Year

[Asia Economy Reporter Dongwoo Lee] Key indicators of the shipping industry, the container ship and bulk carrier freight indices have risen more than threefold compared to a year ago. Due to congestion at some ports caused by the COVID-19 shock, and improvements in global trade volume, the strong shipping freight rates continue even during the off-season.

According to the Shanghai Shipping Exchange on the 14th, the Shanghai Containerized Freight Index (SCFI) was 2,825.75 points as of the 10th, down 58.87 points from the previous week (5th). The SCFI index has continued to rise for about four months since recording 1,438 points on October 9 last year, increasing more than threefold compared to a year ago (910 points as of February 14, 2020).

The industry expects that the reason maritime freight rates have risen since the second half of last year is that the global economy, which was depressed due to COVID-19, has entered a recovery phase, leading to increased cargo volume.

It is evaluated that in the first half of last year, freight rate declines were minimized through flexible adjustments of shipping routes such as temporary suspensions due to COVID-19. Furthermore, from the second half, demand surged as trade volume improved.

As of last month, container cargo volume at eight major Chinese ports increased by 20.5% compared to the previous year. The ports of Long Beach and Los Angeles in the United States also saw cargo volumes increase by more than 20% year-on-year.

The Baltic Dry Index (BDI), which serves as the benchmark for bulk carrier freight rates, recorded 1,317 points as of the 8th. Although it entered a correction phase after reaching a three-month high of 1,856 points (as of January 13), it still represents more than a threefold increase compared to a year ago (411 points as of February 10, 2020).

Bulk carriers usually experience a decrease in cargo volume during the winter season, but expectations of economic recovery due to COVID-19 vaccine development, increased coal demand within China, and the idling of some bulk carriers have prevented freight rate declines.

The industry forecasts that the strong maritime freight rates will continue this year as well. British shipping market analysis firm Clarkson Research expects maritime cargo volume to increase by 5% to 11.9 billion tons this year compared to 11.3 billion tons last year. The Korea Ocean Business Corporation also projects that the average annual BDI will rise by 13.9% to 1,210 points this year compared to 1,062 points last year.

This content was produced with the assistance of AI translation services.