Morgan Stanley: Out of China (Apr 3) - Seasonal Trends in Container Freight
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Morgan Stanley notes that as of April 3, the China Containerized Freight Index exhibited week-over-week gains, with North American routes rising 3% and European routes climbing 5%, with momentum expected to accelerate. Container shipping companies have successfully pushed through rate increases, primarily driven by cost inflation stemming from Middle East conflicts. However, the fourth-quarter F3/26 average CCFI remained in negative territory year-over-year, dropping 21% for North America and 17% for Europe, falling 7% and 3% short of Morgan Stanley's forecasts, respectively.
Specific route data reveals mixed year-over-year results: US West Coast decreased 3.2%, US East Coast fell 6.3%, Northern Europe dropped 2.1%, and the Mediterranean declined 3.0%. The report projects Ocean Network Express (ONE) will report fourth-quarter F3/26 net profit of USD 164 million, though relying solely on recent spot rates introduces downside risk against the company's USD 27 million profit guidance.
While spot rates are entering a seasonal upward cycle, and annual contract renegotiations for North American routes are approaching in May, the broader industry outlook remains cautious. The persistent geopolitical tensions in the Middle East continue to present a significant potential disruption to freight trajectories.