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Logistics Glossary Maritime and Air Freight indices

Registration dateNOV 29, 2021

Cello Square Maritime and Air Freight Indices
  1. 1)Freight Indices1)Freight Indices
    1. ① What is a freight index?

      It is an index that tracks freight rates and is calculated by multiplying the freight rate by the transport volume and freight amount and setting the base value at 100.

    2. ② Types of Freight Indices
      1. Maritime Freight Indices
        • Dry Bulk Cargo Freight Index (BDI ; Baltic Dry Index)
        • Tanker Freight Index (WS ; World Scale)
        • SCFI ; Shanghai Containerized Freight Index
        • CCFI ; China Containerized Freight Index)
        • Container Ship Freight Index (HRCI ; Howe Robinson Container Index)

      2. Air Freight Indices
        • BAI ; Baltic Air Freight Indices
  2. 2)Maritime Freight Indices2)Maritime Freight Indices
      • A maritime freight index is an index that tracks the changes in freight rates required to transport cargo by ship.
      • Maritime freight rates are very volatile. In particular, the freight rate of bulk carriers plays an important role because it constantly changes according to the supply and demand of shipping freight space. This is why it is used as a reference point in maritime shipping and to assess risk.
    1. ① Maritime Freight Indices in the Container Market
      1. SCFI ; Shanghai Containerized Freight Index
        Shanghai Containerized Freight Index Shanghai Containerized Freight Index (Source : Shanghai Shipping Exchange, SCFI)
        • The SCFI is a container freight index for freight from Shanghai that is published weekly by the Shanghai Shipping Exchange (SSE) in China.
        • It is a freight index for the 15 major routes of container ships departing from Shanghai, and the freight rates in the contracts, which vary according to supply and demand, are reflected on the index.
        • Regions served by the 15 major routes of the SCFI: ports based in the Mediterranean, ports based in Europe, USWC (US West Coast), USEC (US East Coast), the Middle East, Oceania, East & West Africa, South Africa, South America, West Japan, East Japan, Southeast Asia, Korea, etc.
        • It boasts the largest cargo volume in the world, making it a benchmark index.
        • It was started on October 16, 2009 with a base value of 1,000.
        • Shipping lines that receive cargo from shippers and directly operate their own ships to make profits such as HMM in Korea, are highly affected by indices such as the SCFI because the indices reflect changes in freight rates.


      2. CCFI ; China Containerized Freight Index
        China Containerized Freight Index China Containerized Freight Index (Source : Shanghai Shipping Exchange, CCFI)
        • The CCFI is a container freight index for freight from China that is published weekly by the Shanghai Shipping Exchange (SSE) in China.
        • It is seen as an index that objectively reflects the global container shipping market conditions and a major index that indicates the shipping market conditions in China.
        • The CCFI is an index reflecting both the short-term freight rates and long-term contracted freight rates across China.
        • It was started on January 1, 1998 with a base value of 1,000, and freight rates for 11 major routes originating from Chinese ports are calculated for each route. The freight rates of 16 shipping lines are used as the basis to calculate the freight index.

      3. Container Ship Freight Index (HRCI ; Howe Robinson Container Index)
        Container Ship Freight Index Container Ship Freight Index (Source : howerobinson.com, HRCI)
        • It is the container ship charter rate index published weekly by Howe Robinson, a British shipbroker that is one of the largest in the world. The index reflects the charter rates of each of the 12 most traded vessel types in the global charter market.
        • It was started on January 1, 1997 with a base value of 1,000.
        • The index rises when the activity to secure ships increases, and the index decreases when the number of available ships increases.
        • Shipping lines that purchase ships as an investment and earn profits through chartering, like most European shipping lines, are greatly affected by the HRCI, an index that reflects changes in charter rates.
    2. ② Maritime Freight Indices by Ship Type
      1. Dry Bulk Cargo Freight Index (BDI ; Baltic Dry Index)
        Dry Bulk Cargo Freight Index Dry Bulk Cargo Freight Index (Source : The Baltic Exchange, BDI)
        • It is a major maritime freight index that tracks changes in dry bulk freight rates and is published daily by the Baltic Exchange in the UK.
        • It is calculated by taking into account the freight rates for transporting dry bulk cargo, such as grain, coal, and iron ore, on major routes around the world as well as the charter fees for renting bulk carriers on those routes.
        • It was started on January 4, 1985 with a base value of 1,000.
        • It shows the volume of raw materials being transported via ships and how frequently these ships make voyages with cargo and thus functions as a leading indicator for predicting the global economy.
        • It is a composite of 3 sub-indices: the BSI, BPI, and BCI.

        composite of 3 sub-indices: the BSI, BPI, and BCIcomposite of 3 sub-indices: the BSI, BPI, and BCI
      1. Tanker Freight Index (WS ; World Scale)
        Tanker Freight Index Tanker Freight Index (Source : HMM IR)
        • It is an international freight index for chartered tankers announced twice a year in January and July by the Worldscale Association (WSA) in the UK.
        • Since the routes of tankers are scattered all over the world and the voyage distances are different, the base fares of major routes are expressed as an index to facilitate the chartering of tankers.
        • It indicates the charter fee for 1 voyage of a tanker, and the fee at which the profit of the shipowner is 0 for a round-trip between two ports is set as 100.
        • It is further separated into 2 sub-indices: the Baltic Exchange Dirty Tanker Index (BDTI) for crude oil and the Baltic Clean Tanker Index (BCTI) for petroleum.
        *Baltic Exchange Dirty Tanker Index (BDTI): It is the freight index that accounts for the largest portion of crude oil shipping, and 300,000-ton supertankers transporting crude oil from the Middle East to countries in East Asia, such as Korea and Japan, are typical of the routes used for crude oil shipping. In fact, most transactions involving crude oil shipping occur on the Middle East-East Asia route. In the case of tankers carrying petroleum, the wide variety of routes makes the barrier to entry in the tanker market very high. This results in an oligopoly/monopoly in the tanker market. Due to high market volatility and high risk of market fluctuations, long-term shipping contracts with large oil refineries are made.
  3. 3)Air Freight Indices3)Air Freight Indices
      • An air freight index refers to an index that tracks the changes in fares required to transport cargo by air.
      • Air freight indices use the fare table established by the International Air Transport Association (IATA) for international freight shipping, and this fare table is also used in Korea after receiving the approval of the government. Two characteristics of air freight rates are that weight is an important factor and that there can be weight discounts.
      1. BAI ; Baltic Air Freight Indices
        Baltic Air Freight Indices Baltic Air Freight Indices (Source : Baltic Exchange)
        • This indicator, commonly known as the TAC Freight Index, was renamed in November 2020 when the UK's Baltic Exchange partnered with Hong Kong's TAC Index. It is a major air freight index published every week.
        • It tracks the changes in freight rates for transporting cargo by air from major air freight centers such as London, Frankfurt, Hong Kong, Chicago, Shanghai, and Singapore to major import destinations around the world.
        • It includes 6 outbound indices: 1 index for each of the 6 major air freight centers. It also includes the freight rates for 17 individual routes in USD/kg.
        • In the past, the TAC Index independently provided air freight indices for 32 major routes based on air shipping data submitted by international freight forwarders, but in 2020, the TAC Index partnered with the Baltic Exchange to increase the precision of the methods and procedures used to calculate the index as well as to increase the number of market participants in air freight shipping.
        • As of 2020, the global air freight market is estimated to be worth about 100 billion dollars per year, and 65 million tons of cargo are transported via air annually. In terms of weight, it accounts for less than 1% of global trade, but accounts for about 35% in terms of monetary value. As a result, air freight indices are comparable to maritime freight indices in terms of monetary value and play an important role in the global shipping market.