China is the largest exporting country in the world, whose exports reflect not only its domestic production level but also global demand. With tough pandemic restrictions, China’s economy recovers faster than the other advanced economies. Production in China has returned to pre-COVID level, as manufacturers received divert orders from other hard-hit countries by the pandemic. Shanghai Shipping Exchange’s China Containerize Freight Index (CCFI) reflects China’s demand and the global economic recovery.
What is CCFI?
Shanghai Shipping Exchange (SSE) established CCFI in 1998, which is the barometer of the shipping charges by large sea freight.
CCFI is composed of a composite index and 12 subindexes of 12 different shipping routes. Besides CCFI, SSE also established Shanghai containerized freight index (SCFI). Port of Shanghai is the largest port in the world in terms of throughput. SCFI measures the total shipping charges of 13 routes from Shanghai to around the world. Shipping charges vary based on the price of goods, shipping costs, shipment volume and the number of containers.
When global demand is high, exports from China increase. Demand for containerized freight rises, and shipping charges rise, too, bringing CCFI higher.
When global demand is sluggish, exports from China decrease. Demand for containerized freight declines, and shipping charges falls, too, bringing CCFI lower.
SSE releases the latest data every Friday. CCFI serves as a leading indicator for global demand and China’s trade volume. It rises as China’s exports increase and declines as exports diminish.
How to utilize CCFI?
This year, Chinese stocks have grown considerably despite the pandemic. China is one of the very few countries that maintains a positive GDP growth rate in 2020. Exports declined in February only and rebounded fast. As of November, Chinese exports have grown by over 20% year-over-year. Both CCFI and SCFI didn’t fall much back in February and instead, they recently reached record highs. With tough pandemic restrictions and a full-fledged supply chain, China has received orders from other countries where production was halted due to the pandemic. Trade surplus thus set a record high of US$75.4 billion, which will bring up GDP growth.