Freight index is up for country's ports

The Chinese container freight business, partly buoyed by Christmas orders, is enjoying its best numbers since the start of the global financial crisis.

But negative factors are helping keep optimism at bay among the country's ports and shipping companies.

Through Sept 11, the Chinese Container Freight Index rose to 941.9 points after continuous increases during the previous two weeks - a 23.39 percent hike compared with the lowest point in June. Early this month, the index rose 2.1 percent week-on-week.

Ren Minqiang, head of Qingdao Qianwan Container Terminal Co Ltd, said he estimated a "shining" September, based on freight going up nearly 9 percent in the first two weeks of the month, compared with the same period last year.

Ren said autumn is traditionally a strong time for Chinese shipping because of Christmas holiday business.

In the first quarter of 2009, when business was at its worst, Ren said he suggested his staff go home to enjoy their annual leave.

The situation is different now, he said.

According to data released by the Shanghai Shipping Exchange, the average shipping space utilization ratio has reached 95 percent since July - up from 60 percent to 70 percent in February.

"Space is full again, as if we are back to prosperous times," said Wu Wei, general manager of Sinotrans Fujian Corp.

Wei Jiafu, chairman of China Ocean Shipping (Group) Co, China's largest global shipping group, said European and US markets are going to demand more Chinese exports as the financial situation improves in those countries.

Shipping companies and ports have already lifted prices for their services.

Luo Xiong, an analyst with Merchants Securities, said freight prices have passed the break-even point at shipping companies. By comparison, during the worst of the slump, some companies lost $500 to $600 per delivered container.

Still, there are concerns the boom in business won't last long. Demand and prices will decline again after this fall's peak season, analysts said.

"For the entire container industry, it is still quite thorny to realize a profit within one to two years," said Wu Yunying, an analyst with Changjiang Securities.

During the first half of this year, the container freight division of China Ocean Shipping (Group) Co reported a 3.4 billion yuan loss, versus a 2.2 billion yuan profit during the same period last year.

(China Daily 09/28/2009 page4)