Since the opening after the National Day holiday, the Shipping Index (Europe) futures have plummeted. The 2412 contract dropped over 20% from the pre-holiday high of 2540.4 points, closing at 1893 points in the early trading today. (Click to experience the Shipping Market Monitoring Tool)

News:

On October 8th, according to CNN, a senior official of the Hezbollah in Lebanon stated that Hezbollah supports efforts to achieve a ceasefire in Lebanon, marking the organization's first public support for a ceasefire, without conditions related to ending the conflict in Gaza. Hezbollah's Deputy Chief Naim Qassem stated, 'We support the political efforts led by (Parliament Speaker) Berri to achieve a ceasefire principle. Once the ceasefire is confirmed, diplomatic means can achieve it, all other details will be discussed, and we will collectively make decisions.'

Shipping monitoring tool - important function

On October 4th, Politico reported that the port strike has ended, and the unions representing tens of thousands of dockworkers and maritime workers on the East Coast have reached a preliminary agreement on wage issues, extending an expired contract until January 15, 2025. Investors can stay up to date with the latest market dynamics through our Shipping Market Monitoring Tool.

Shipping monitoring tool - important function

Guo Yanpeng, a researcher at Zhonghui Futures, believes that in late September, the risk of strikes at East Coast ports in the USA has become an uncertain factor in the market. The market is worried about the reoccurrence of container shortages, leading to continuous rise in European freight rates. On October 3, both labor and management parties reached a preliminary agreement, ending the strike earlier than expected. European freight rates are currently in the off-peak season, and freight rates are trending downwards, so the European route is returning to a downward trend with a loose supply and demand situation.

Spot freight rates

The latest European freight rate data shows that the freight rates for large containers from Maersk to Rotterdam and Felixstowe have dropped to around $3,000, a decrease from previous levels.

According to data from the Shanghai Shipping Exchange, as of October 7, 2024, the Shanghai Export Container Settlement Freight Rate Index (European route) was at 2662.75 points, a 15.9% decrease from the previous period.

In addition, monitoring data through the shipping plate god tool shows that the freight rates on the European route continue to decline, indicating that major shipping companies are lowering prices quickly and significantly.

Shipping Plate God Tool - Data Feature

Shipping Plate God Tool - Data Feature

Shipping Plate God Tool - Data Feature

Supply and demand structure

GTJA Futures stated that as of November, there is still excess capacity pressure. The weekly average capacity recorded in November is 0.292 million TEU/week, 3.1% higher than August. However, on the demand side, in November, China's exports to Northwest Europe usually decreased by 8-13% compared to August, therefore, the current derived November supply and demand situation on the Europe route may be weaker than that of August.

Institutions strategy

Yide Futures stated that the early end of the strike by East Coast port workers quickly repaired the market sentiment after expectations were proven wrong. In addition, the latest published symbol index (SCFIS Europe route) plummeted by 15.9% to 2662.75 points, indicating a continued downward trend in actual settlement levels, with the shipping market trend returning to being driven by fundamentals. The strategy maintains a bearish stance, especially on next year's off-season contracts, focusing on short selling opportunities on rallies. Considering the ongoing escalation of the conflict in Lebanon and Israel, as well as the existing spill-over risks and the expectation of carriers holding prices before signing long-term contracts at the end of the year, it is not advisable to be overly bearish on the EC2412 contract.

Overall, the early end of the strike has repaired the expected shortage of capacity supply, and the market is gradually returning to a pattern driven by fundamentals. Investors should closely monitor the price support trends of carriers at the end of the year, as well as changes in the market's supply and demand structure.