SSE defends 'misunderstood' Shanghai Rate Index
The president of the Shanghai Shipping Exchange, defending the integrity of the group’s closely watched and often criticized rate index, said Tuesday the pricing measure is built on survey information entirely separate from government-mandated shipment filings, the Journal of Commerce reported.
The Shanghai Containerized Freight Index is “widely misunderstood,” Ye told the inaugural Journal of Commerce Shanghai Container Shipping Conference.
The SSE is the clearinghouse for filings from the shipping industry on the movement of goods, including rate information. But Ye said those filings play no role in the SSE’s rate index and the SSE has no access to the details of final executed agreements.
The SCFI “is not based on your filed information. This is not true,” he said.
The rate index, along with related indices on regional trade lanes out of Shanghai, has drawn sharp attacks from several shipping industry officials as the SCFI has gained attention and been tied to the launch of container freight rate derivatives market.
Industry executives at recent industry meetings this year have said the SCFI lacks transparency and puts too much responsibility onto a small group of largely anonymous Chinese freight forwarders.
Ye said the SCFI and its related indices are based on weekly surveys of 15 container ship lines and 15 freight forwarders of varying sizes, and he said the measure has shown strong integrity since it was created 13 years ago. .
Most recently, the SCFI has identified weakening rates carriers and shippers are seeing on Asia-Europe trade lanes. He noted Shanghai-Europe rates have collapsed by half in the last eight months, registering $880 per 20-foot equivalent in the most recent week.
The push toward derivatives has brought other players into the market of setting rate-based benchmarks for use in contracts, including Drewry Shipping Consultants and Container Trade Statistics, both based in London.
Ye threw a verbal barb their way. He displayed a line chart showing the SSE Asia-US West Coast index tracking fairly closely to the Drewry Container Rate Benchmark over several months but noted Drewry’s remained unchanged at some points for several weeks at a time while the SSE measure followed trends up and down. “Our curve looks more like a curve,” he said. “They fail to track some prices. I’m not saying theirs is not a good index, but I am only showing this for the sake of information.”
Drewry has not yet published the Shanghai-to-Los Angeles World Container Index it is preparing for potential use in the derivatives market.
“The important thing is that all three indices are indeed correlated and are all reflecting the market, even though they have different sources and methodologies,” said Drewry’s Philip Damas. “The difference between the World Container Index and the SSE is that, unlike the SSE, the World Container Index will cover the not only headhaul routes from China, but also the backhaul routes to China and the trans-Atlantic routes.”
The Shanghai Containerized Freight Index is “widely misunderstood,” Ye told the inaugural Journal of Commerce Shanghai Container Shipping Conference.
The SSE is the clearinghouse for filings from the shipping industry on the movement of goods, including rate information. But Ye said those filings play no role in the SSE’s rate index and the SSE has no access to the details of final executed agreements.
The SCFI “is not based on your filed information. This is not true,” he said.
The rate index, along with related indices on regional trade lanes out of Shanghai, has drawn sharp attacks from several shipping industry officials as the SCFI has gained attention and been tied to the launch of container freight rate derivatives market.
Industry executives at recent industry meetings this year have said the SCFI lacks transparency and puts too much responsibility onto a small group of largely anonymous Chinese freight forwarders.
Ye said the SCFI and its related indices are based on weekly surveys of 15 container ship lines and 15 freight forwarders of varying sizes, and he said the measure has shown strong integrity since it was created 13 years ago. .
Most recently, the SCFI has identified weakening rates carriers and shippers are seeing on Asia-Europe trade lanes. He noted Shanghai-Europe rates have collapsed by half in the last eight months, registering $880 per 20-foot equivalent in the most recent week.
The push toward derivatives has brought other players into the market of setting rate-based benchmarks for use in contracts, including Drewry Shipping Consultants and Container Trade Statistics, both based in London.
Ye threw a verbal barb their way. He displayed a line chart showing the SSE Asia-US West Coast index tracking fairly closely to the Drewry Container Rate Benchmark over several months but noted Drewry’s remained unchanged at some points for several weeks at a time while the SSE measure followed trends up and down. “Our curve looks more like a curve,” he said. “They fail to track some prices. I’m not saying theirs is not a good index, but I am only showing this for the sake of information.”
Drewry has not yet published the Shanghai-to-Los Angeles World Container Index it is preparing for potential use in the derivatives market.
“The important thing is that all three indices are indeed correlated and are all reflecting the market, even though they have different sources and methodologies,” said Drewry’s Philip Damas. “The difference between the World Container Index and the SSE is that, unlike the SSE, the World Container Index will cover the not only headhaul routes from China, but also the backhaul routes to China and the trans-Atlantic routes.”